Sentences with phrase «bond ratings make»

Bond ratings make it easy for you to understand the default risk of a bond, while still taking into account all the other risks.

J.P. from Novel Investor presents How Bond Ratings Work, and says, «Bond ratings make it easy for investors to understand the default risk of a bond, while still taking into account all the other risks.»

Not exact matches

He says that if you can get only a 2 % return on bonds — rates we're seeing today — and 5.5 % yields on blue - chip stocks like BCE, it makes sense to overweight stocks, no matter what your age.

Typically, higher interest rates make existing bonds less attractive to buyers, since they can get new notes at loftier yields.

For the past seven years, low rates have made bonds relatively unattractive, and the stock market comparatively more attractive.

The low interest rates that the Federal Reserve relied on to kick - start the economy, meanwhile, fed this same dynamic, making it easier for fast - growing companies to borrow money to grow further — and making bond interest look unattractive compared with stock dividends.

As interest rates rise, the prices of existing bonds fall in order to make the yield of their fixed coupons competitive in the market.

Bond rating services now warn the U.S. to get its books in order or face potential downgrades, which would make financing its obligations more costly.

Bond yields rose and stocks slumped after an unexpected rise in consumer inflation to its fastest pace in a year, making it more likely the Fed will raise interest rates three or more times this year.

This makes sense; lower growth should result in bond yields falling, anticipating lower Bank of Canada rates in the future and less need for a risk premium around inflation.

Even a debt - ceiling breach of a week or two during which the U.S. Treasury keeps making principal and interest payments to bond holders might hurt the U.S.'s rating.

More from Balancing Priorities: What to do with your bond portfolio as Fed rates rise Credit scores are set to rise Don't make these money mistakes when you're just starting out «There is no sense in bearing the risk of an adjustable rate when you can lock in a fixed rate at essentially the same level,» he said.

Some investors are now making calls that the euro zone's central bank could end its massive bond - buying program by the end of next year, with a potential rate increase in the fourth quarter.

I sent out to some people last Wednesday why I thought the CDS market would outperform ETF's, and that is still my view, and has a lot to do with the bonds that make up the high yield index and their rate risk exposure for some, and horrible convexity for others.

This tool uses the present value of bond portfolios, adjusted for interest rate and inflation expectations, to show current retirees how much in retirement savings they need today to account for every $ 1 they need in the future, assuming they hold a portfolio made up entirely of investment - grade bonds and longer - term Treasurys.

In other words, it is the internal rate of return (IRR) of an investment in a bond if the investor holds the bond until maturity and if all payments are made as scheduled.

If the government can guarantee certain savings in bank accounts through the F.D.I.C., why not establish a program that would require that every employee own a regulated block of stock (Retirement Account) made up of stock in the company the employee works for and, so the employee will not have all his retirement eggs in one basket, include in this retirement basket high rated bonds and stocks from other non-competing employee - owned companies?

If you are invested in bonds or bond funds, make sure that the objectives, maturity length, yield and credit ratings make sense for your particular goals and circumstances.

Bonds don't sound too complex but the situation that we are currently in with very low interest rates makes things both interesting and challenging.

It's also makes sense to look back at the historical data to see what happens when bonds aren't in a near - continuous falling interest rate environment.

And the Fed increasing interest rates, plus rising bond yields, typically makes stock investors nervous.

The other provinces would have access to Canada Pension Plan surpluses, in proportion to the contributions made by their residents, through the sale of provincial bonds and provincially guaranteed securities on 20 year terms at the long - term federal bond rate.

This makes sense given how bonds are structured, but I think many investors miss this point when they worry about the potential risks from rising interest rates.

It is difficult to make money in bonds in a rising rate environment, but there are ways to avoid losses.

The potential counter weights that could cap the 10 - year yield would be a negative stock market reaction that drives investors to bonds; lower interest rates outside the U.S. that make the U.S. debt relatively more attractive, and good demand for longer - dated securities from insurers and others.

You could potentially lose money in your bond fund depending on interest rate movements around the time you actually need to make your payments.

Whatever happens to rates from here it makes sense to reign in your expectations as a bond investor based on today's low starting yields.

a bond where no periodic interest payments are made; the investor purchases the bond at a discounted price and receives one payment at maturity that usually includes interest; they have higher price volatility than coupon bonds as a result of interest rate changes

And newly issued bonds tend to offer higher interest rates to make them more attractive to buyers.)

Although bonds generally present less short - term risk and volatility than stocks, bonds do contain interest rate risk (as interest rates rise, bond prices usually fall, and vice versa) and the risk of default, or the risk that an issuer will be unable to make income or principal payments.

While bond credit ratings and relative yield can compensate an investor for the relative risk of companies to make good on their debts, the recent past has shown this is not always the case.

Another way to facilitate green investments is for rich governments to buy down interest rates, which makes it more attractive to issue green bonds.

If you're having a difficult time handling the potential risks from rising interest rates, it could make sense to have your safe bucket in cash as opposed to bonds.

All else equal, unless it possesses some sort of major offsetting advantage that makes the risk of non-payment low, a company with a low - interest coverage ratio will almost assuredly have bad bond ratings, increasing the cost of capital; e.g., its bonds will be classified as junk bonds rather than investment grade bonds.

Higher rates also make investments like bonds, which pay interest, more compelling to investors.

Reuters reported that the BoJ, as it is colloquially known, is considering making negative interest rates a continued centerpiece of monetary policy, where bond buying has just not been enough to stimulate the economy.

These firms base their ratings on the bond issuer's financial health and likely ability to make interest payments and return the bondholders» principal.

In an unconstrained bond fund, the manager can hedge interest rate risk with futures, options, or swaps, or even short Treasury bonds or notes, and make up the loss in yield by overweighting credit.

-LSB-...] happens to rates from here it makes sense to reign in your expectations as a bond investor based on today's low starting yields.

Their opinions of that creditworthiness — in other words, the issuer's financial ability to make interest payments and repay the loan in full at maturity — is what determines the bond's rating and also affects the yield the issuer must pay to entice investors.

Its aggressive post-crisis monetary policy to drive down interest rates made the buying and selling of bonds unprofitable.

-- A lot has been made about the potential for a bond bubble with interest rates near historic -LSB-...]

An allocation to bonds hardly makes up for equity losses at current interest rates.

A lot has been made about the potential for a bond bubble with interest rates near historic lows and not much room to fall any further.

While building a bond ladder may help you manage interest rate and reinvestment risk to some extent, there are 6 important guidelines to consider to make sure you are diversified and to attempt to protect yourself from undue credit risk.

If rates rise, it will make for a much more volatile ride for bonds.

«Laddering bonds may be appealing because it may help you to manage interest rate risk, and to make ongoing reinvestment decisions over time, giving you the flexibility to invest in different credit and interest rate environments,» says Richard Carter, Fidelity vice president of fixed income products and services.

Bonds are subject to the risk that an issuer will fail to make payments on time and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments.

It may make sense to review your strategy, but we think bonds play a role in most portfolios, regardless of the rate environment.

Which doesn't cover investments in shares, the returns on which are directly affected by changes in the corporate tax rate (or the myriad of other investment vehicles liked bonds, REITs, mutual fund trusts, etc. that make up the bulk of the universe for Canadian investors).