Sentences with phrase «because yield to maturity»

Because yield to maturity is the interest rate an investor would earn by reinvesting every coupon payment from the bond at a constant interest rate until the bond's maturity date, the present value of all the future cash flows equals the bond's market price.

Not exact matches

Government bonds could help reduce default risk, but because of the length of maturity required to earn any meaningful yield, they do little to reduce duration risk - i.e. the overall sensitivity of a portfolio to interest rate rises.

Because the Chinese yield curve is extremely flat, investors wouldn't even need to invest in longer maturities in order to obtain higher yields, meaning that they can remain comfortabe in shorter and less risky maturities.

The yield to maturity is higher than the 3 % coupon because when the bond expires, I get paid back $ 100 a share.

Naturally, a policy buyer would prefer the insured to be elderly, in poor health, with a policy that has low cash value and a high death benefit, because all of these factors might increase the buyer's yield - to - maturity on the policy when you die.

Because bonds with longer maturities have a greater level of risk due to changes in interest rates, they generally offer higher yields so they're more attractive to potential buyers.

This ETF would be much less tax - efficient than a five - year GIC ladder, because that entire 4.27 % coupon (minus fees) is fully taxable, even though the yield to maturity is just 1.32 %.

This makes the yield to maturity easier to calculate for zero coupon bonds, because there are no coupon payments to reinvest, making it equivalent to the normal rate of return on the bond.

It is invested primarily in the credit market, not so much in government bonds because government bond yields are so low, but we're looking for absolute returns even if interest rates go up, so some of the portfolio, a significant piece of it actually, is floating rate, so if interest rates go up, you just get higher cash flows, which will support higher returns, and the rest of the portfolio is in relatively short maturity bonds, which will have some price volatility and if there's bad market conditions, will have temporary losses, so the goal is to offer something that is absolute returns.

But because the investor would pay a premium to purchase the existing note, the yield to maturity falls to 5.50 %.

I'm going to focus on yield to maturity because it is a rough indicator of what sort of return each fund is likely to generate.

XBB has a large number of premium bonds (because of falling interest rates), which results in a capital loss when they mature, and it is this that results in the lower yield to maturity.

In other words, if interest rates stay the same, you can expect CLF to post capital losses because its cash yield is higher than its yield - to - maturity.

Because today's yields - to - maturity are all close to 1.8 %, it is a good idea to emphasize shorter maturities with the hope of obtaining higher interest rates in the future.

I abbreviate: inflation - protected bonds = IPB (I choose this term because I don't want to limit this question to US TIPS); yield to maturity = YTM.

Yields on callable bonds tend to be higher than yields on noncallable, «bullet maturity» bonds because the investor must be rewarded for taking the risk the issuer will call the bond if interest rates decline, forcing the investor to reinvest the proceeds at lower yYields on callable bonds tend to be higher than yields on noncallable, «bullet maturity» bonds because the investor must be rewarded for taking the risk the issuer will call the bond if interest rates decline, forcing the investor to reinvest the proceeds at lower yyields on noncallable, «bullet maturity» bonds because the investor must be rewarded for taking the risk the issuer will call the bond if interest rates decline, forcing the investor to reinvest the proceeds at lower yieldsyields.