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Current Yield – But now consider how yield changes if the price of that same bond falls. If the bond mentioned above is resold for $800 it results in a current yield of 6.25%.
Corporate bonds tend to pay out more than equivalently rated government bonds. For example, corporate rates are generally higher than rates for the U.S. government, which is considered as safe as ...
Currently, yields on Aaa corporate bonds have passed 5.1%. Second, this has pushed down the value of older bonds. The more new bonds pay, the less investors pay to buy previously-issued assets.
In finance, bond convexity is a measure of the non-linear relationship of bond prices to changes in interest rates, and is defined as the second derivative of the price of the bond with respect to interest rates (duration is the first derivative). In general, the higher the duration, the more sensitive the bond price is to the change in ...
The low yield of the safe US Treasury bonds created demand by global investors for subprime mortgage-backed CDOs with their relatively high-yields but credit ratings as high as the Treasuries. This search for yield by global investors caused many to purchase CDOs, though they lived to regret trusting the credit rating agencies' ratings.
2. Balance government and corporate bond exposure. Lower rates tend to reduce yields on government bonds, which can push investor demand toward higher-yield corporate bonds. While this higher ...
The Frankfurt Bond Market, 1988. A bond index or bond market index is a method of measuring the investment performance and characteristics of the bond market.There are numerous indices of differing construction that are designed to measure the aggregate bond market and its various sectors (government, municipal, corporate, etc.)
The effect of interest rates on bond prices is more pronounced in longer-maturity bonds than in shorter-term ones. Rising interest rates have almost no effect on bonds that are set to mature in a ...
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