If
all Base bond holders have been paid but the price is still too high, the protocol distributes Basecoins to Base Share holders under the impression they will sell them in the open market, until the price decreases back to the target price.
Not exact matches
In contrast, when the price is too high, the protocol increases supply by issuing new Basecoins to pay back the
holders of
Base Bonds.
Based on the unofficial inflation rate,
bond holders are literally throwing away their money.
``... if those [people] are
holders of government
bonds based upon a benign outlook for inflation, they had better cash some of them in, especially at today's 4.0 percent yield for 10 - year Treasurys.»
In essence, a
holder of the ETN has bought a senior unsecured zero coupon
bond from Barclays, with an ultimate payoff
based off of the return on the commodities index less 0.75 % / year.
If the OID did not increase the
holder's tax
basis during the period the
bond is outstanding, a sale of the
bond for an amount in excess of $ 4,628 would produce taxable capital gain to the bondholder, even if the increase in value arose solely as a result of the accretion of OID.
When a
bond is sold, an investor may also recognize a capital loss if the sale proceeds (adjusted for selling costs) are less than the
holder's tax
basis.
Because this calculation is only necessary to determine the bondholder's
basis, it need not be done by the bondholder until sale or other disposition of the
bond and, if the
holder holds the
bond until maturity, it need never be done.
the
holder's tax
basis in the
bond (the amount the
holder paid for the
bond originally, including any additions to such
basis, such as OID as discussed in the following section).
Because this CYM method is also utilized for other purposes related to tax - exempt
bonds, including the treatment of premium and «market discount,» we will calculate the CYM on the above
bond to demonstrate how the
holder's
basis is increased.
Standard and Poors rates all
bonds between AAA, the highest rating, and DD, the lowest rating,
based on the
bond issuer's ability to pay back their
bond holders.
By way of an example, a
holder of 1,000 advisor - class units of the Horizons Active Corporate
Bond ETF (HAB.A) will receive 1,001 common class units (HAB) of the same ETF
based on its Conversion Ratio.
In order to avoid capital gains taxes on pre-maturity sales of tax - exempt
bonds (zero coupon or not) with an OID, the IRS provides that the
holder's
basis increases (accretes) semi-annually.