Sentences with phrase «to hold to maturity»

The idea is that bonds offer a guaranteed return if held to maturity, an important factor for anyone expecting to pay living expenses from their investments.

These securities guarantee a rate of return when held to maturity, and they can provide a steady stream of monthly or quarterly income.

The option of holding to maturity means you will have to wait longer than most can wait, and most institutional investors don't even have an average 10 - year holding period.

The principal value will fluctuate with changes in market conditions; if not held to maturity, T - bills may be worth more or less than their original cost.

The yield to maturity is an estimate of what an investor will receive if the bond is held to its maturity date.

The biggest advantage for individual bonds over mutual funds is that there is no interest rate risk for bonds held to maturity.

Here, I am ignoring tax effects and assuming holding to maturity, in order to focus on the statement in the first bullet point.

The accounting varies depending on the choice, but held to maturity means that there is no mark - to - market.

In fact, most options held to maturity expire worthless.

Up to this point, we've talked about bonds as if every investor holds them to maturity.

Consider that 75 % of all options held to maturity expire worthless.

It's much safer to own individual bonds and simply hold them to maturity.

I plan to just hold them to maturity and get back principal and earn the annual coupon for my individual holdings.

If you don't sell and therefore hold to maturity, the decline is irrelevant.

A calculation of the total return to a bond investor who holds to maturity.

This is because many investors do not purchase a 10 year bond and hold it to maturity collecting the interest payments every year.

Yield to maturity is the return a bond earns if held to maturity, based on its price and coupon.

Some structured products offer protection of the principal — when held to maturity, subject to issuer credit risk, thus offering a lower risk than investing in the underlying asset directly.

Investors seeking to generate both income and capital appreciation from their bond portfolio may choose an active portfolio management approach whereby bonds are bought and sold instead of held to maturity.

If not held to maturity, bonds may be worth more or less than their original cost.

The market weighted average rate of return anticipated on the bonds held in a portfolio if they were to be held to their maturity date.

However, changing rates and secondary - market values should not affect the principal of bonds held to maturity.

However, changing rates and secondary - market values should not affect the principal of TIPS held to maturity.

Since bonds are best held to maturity for most investors, guaranteeing the return available when you bought the bond, there is less to worry about with stocks.

So after paying fees, your real return on a bond held to maturity in this fund can't exceed a paltry 0.56 % per year.

To make things even more difficult, investors are increasingly buying to hold to maturity for the simple reason that if spreads are going to tighten, it is difficult to find a replacement once a bond is sold.

If the second bondholder holds to maturity, he or she will thus recognize a gain of $ 200 ($ 5,000 proceeds on maturity minus $ 4,800 basis).

Professional traders and so - called investors alike prize thirty - year Treasury bonds for their liquidity and use them to speculate on short - term interest rate movements, while never contemplating the prospect of actually holding them to maturity.

You never hold to maturity as this is handled for you - in many cases, the manager will be buying and selling bonds all the time in order to give you a stable fund that returns you a dividend.

But you might do even better — by buying newly issued Treasury, municipal and corporate bonds, and then holding them to maturity.

Ten - year TIPS (and / or I - Bonds) ladders held to maturity make a lot of sense in an actual portfolio these days.

Most insurance companies and most pension plans are continually reinvesting money received from maturing obligations into new obligations and also investing new moneys into new obligations, the vast bulk of which will be performing loans held to maturity.

I'll earn more than the Treasury held to maturity no matter what (well, unless the bank / CU fails, in which case I may have to take my money back early, and reinvest it at a lower rate, but this is very low probability if you look at bank failure rates), and if rates increase enough, I might earn more (as in the case of redeeming my 2 % CDs early and buying 3 % CDs).

Should a medical emergency or the need for long term care, for example, force us to sell bonds we intended to hold to maturity after rates have risen, we might take a loss on the bonds sold.

However, if you're planning to buy a Government of Canada bond and are satisfied with getting 4.5 % yield by holding the bond to maturity, then you can buy it now and hold to maturity without worrying about the loss of your original principal.

Uncertainty in housing markets and the economy are forcing financial institutions to mark mortgage securities at fire - sale prices, rather than their value if held to maturity, effectively creating a vicious circle of more write - downs that further depress asset values, Mr. Bernanke explained.

Treasurys, for example, are backed by the full faith and credit of the federal government, and principal is guaranteed when held to maturity, while corporate and covered bonds have no such guarantee.

If not held to maturity, they could be worth more or less than the original amount paid.

Yield to Maturity (Average YTM) The percentage rate of return paid on a bond, note or other fixed income security if the investor buys and holds it to its maturity date.

Considering that there has been some inflation every year over the past 60 years, the principal of TIPS held to maturity is likely to be higher than when it was purchased.2

If you now want to sell your bond in the market, the price must fall to a point where another investor can earn 7 % by buying it and holding it to maturity in 4 years.

Held to maturity means the value of the bonds amortizes over time, but price moves don't affect the accounting, unless default is likely.

In this article from Quebec's Les Affaires business magazine, archerETF explains why bond funds, including bond ETFs, will under - perform individual bonds held to maturity.

By locking in a yield at the beginning, the ladder helps insulate the bond buyer from price losses if the investor holds to maturity.

The difference between the issue price and the face value is treated as tax - exempt income rather than as capital gains if the bonds are held to maturity.

When the market sours on you, you can hold them to maturity and get your money back, plus you get all the coupon payments along the way.

Unlike mutual funds, individual bonds mature at par letting the investor know exactly what they will earn if the bond is held to maturity.