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Futures may not be well-understood by the average investor, but they are often used by institutions and traders to either manage risk through hedging or to court risk through speculation. A futures...
In a new post at the New York Federal Reserve's blog site, three bank officials took a look at the $3.7 trillion US municipal bond market. After noting that about 75% of US municipal bonds are ...
July marked nine straight months of municipal bonds' strong performance, according to a research note from BlackRock, an investment management company. Why Muni Bonds Are a Good Investment Play ...
Muni arb is a relative value strategy that seizes upon an inefficiency that is related to government tax policy; interest on municipal bonds is exempt from federal income tax. [ 1 ] [ 2 ] Because the source of this arbitrage is artificially imposed by government regulation, it has persisted (i.e., it has not been "arbed away") for decades.
A 2007 study concluded that the average investment grade tax exempt 1-10 year municipal bond traded 21 times over its 11-year sample and 5.65% of issues only traded once. [ 21 ] Unlike corporate and Treasury bonds, which are more likely to be held by institutional investors, municipal bond owners are more diverse, and hence harder to locate ...
A futures contract might also opt to settle against an index based on trade in a related spot market. ICE Brent futures use this method of settlement. Expiry (or Expiration in the U.S.) is the time and the day that a particular delivery month of a futures contract stops trading, as well as the final settlement price for that contract. For many ...
First, muni bonds are often investment-grade assets. Around seven out of 10 in the Bloomberg Municipal Bond Index are in the top two rungs of credit quality, Schwab cited.
Forward prices of equity indices are calculated by computing the cost of carry of holding a long position in the constituent parts of the index. This will typically be the risk-free interest rate, since the cost of investing in the equity market is the loss of interest minus the estimated dividend yield on the index, since an equity investor receives the sum of the dividends on the component ...