It assumes that coupon interest
paid over the life of the bond will be reinvested at the same rate.
Not exact matches
After issuing
bonds paying interest at, say, 5 percent, they would invest the proceeds and hope that they could earn a higher rate
of return
over the
life of the
bond.
It does instead assume you will have a relatively balanced portfolio
of stocks and
bonds in order to generate the income necessary to
pay your inflation adjusted
living expenses
over a relatively long time horizon.
With most wrap agreements, once a payment is received or made by the wrapper, the wrapper enters into a countervailing transaction with the pool to
pay or receive, respectively, a stream
of payments
over the
life of the
bond that was wrapped equal to the present value
of the initial payment when the
bond was tapped.