Markets - Bonds - Trading - Investing - Trading - Valuatio

http://www.1mtx.com/markets-trades/en/index.php?language=en&menu=MARKETS&punkt=Bond&punkt2=Bonds&index=Trading#BondsTrading A bond is a debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the principal and interest (the coupon) at a later date, termed maturity. BONDS: Investing - Trading - Valuation - Bond Indices Bonds are bought and traded mostly by institutions like pension funds, insurance companies and banks. Most individuals who want to own bonds do so through bond funds. As of 2006, the size of the international bond market is an estimated $45 trillion, of which the size of the outstanding U.S. bond market debt was $25.2 trillion. Investing Trading Bond Valuation Bond Indices » ...more Links ! ...| Reports | Analysis | Opinions | Comments |... ...Take a Break...Just Relax... The NYSE Bonds trading platform provides a more efficient and transparent way to trade bonds. The platform incorporates the design of the current NYSE Arca all-electronic trading system. ... Latest Updates... NYSE Bonds: Overview Daily Bond Activity Latest Updates... ...This system provides investors with the ability to readily obtain transparent pricing and trading information, enabling them to make better investment decisions. The system has also been expanded to include the bonds of all NYSE-listed companies and their subsidiaries without the companies having to list each bond issued. NYSE Bonds operates the largest centralized bond market of any U.S. exchange or other self-regulatory organization. Investing Bonds are bought and traded mostly by institutions like pension funds, insurance companies and banks. In the USA nearly ten percent of all bonds outstanding are held directly by households. As a rule, bond markets rise (while yields fall) when stock markets fall. Thus bonds are generally viewed as safer investments than stocks, but this perception is only partially correct. Bonds do suffer from less day-to-day volatility than stocks, and bonds' interest payments are higher than dividend payments that the same company would generally choose to pay to its stockholders. Bonds are liquid — it is fairly easy to sell one's bond investments, though not nearly as easy as it is to sell stocks — and the certainty of a fixed interest payment twice per year is attractive. Bondholders also enjoy a measure of legal protection: under the law of most countries, if a company goes bankrupt, its bondholders will often receive some money back (the recovery amount), whereas the company's stock often ends up valueless. However, bonds can be risky: 1) Fixed rate bonds are subject to interest rate risk, meaning that their market prices will decrease in value when the generally prevailing interest rates rise. Since the payments are fixed, a decrease in the market price of the bond means an increase in its yield. When the market's interest rates rise, then the market price for bonds will fall, reflecting investors' improved ability to get a good interest rate for their money elsewhere — perhaps by purchasing a newly issued bond that already features the newly higher interest rate. 2) Bond prices can become volatile if one of the credit rating agencies like Standard & Poor's or Moody's upgrades or downgrades the credit rating of the issuer. A downgrade can cause the market price of the bond to fall. As with interest rate risk, this risk does not affect the bond's interest payments, but puts at risk the market price, which affects mutual funds holding these bonds, and holders of individual bonds who may have to sell them. 3) A company's bondholders may lose much or all their money if the company goes bankrupt. Under the laws of many countries (including the United States and Canada), bondholders are in line to receive the proceeds of the sale of the assets of a liquidated company ahead of some other creditors. Bank lenders, deposit holders (in the case of a deposit taking institution such as a bank) and trade creditors may take precedence. 4) Some bonds are callable, meaning that even though the company has agreed to make payments plus interest towards the debt for a certain period of time, the company can choose to pay off the bond early. This creates reinvestment risk, meaning the investor is forced to find a new place for his money, and the investor might not be able to find as good a deal, especially because this usually happens when interest rates are falling. There is no guarantee of how much money will remain to repay bondholders. As an example, after an accounting scandal and a Chapter 11 bankruptcy at the giant telecommunications company Worldcom, in 2004 its bondholders ended up being paid 35.7 cents on the dollar. Efforts to control risks are called immunization or hedging. Investing Trading Bond Valuation Bond Indices » ...more Links ! ...| Reports | Analysis | Opinions | Comments |... ...Take a Break...Just Relax... ^ top Trading Bonds are bought and traded mostly by institutions like pension funds, insurance companies and banks. Most individuals who want to own bonds do so through bond funds. Still, in the U.S., nearly ten percent of all bonds outstanding are held directly by households. Bonds are bought and traded mostly by institutions like pension funds, insurance companies and banks. Most individuals who want to own bonds do so through bond funds. Bonds markets, unlike stock or share markets, often do not have a centralized exchange or trading system. Rather, in most developed bond markets such as the U.S., Japan and western Europe, bonds trade in decentralized, dealer-based over-the-counter markets. In such a market, market liquidity is provided by dealers and other market participants committing risk capital to trading activity. In the bond market, when an investor buys or sells a bond, the counterparty to the trade is almost always a bank or securities firm acting as a dealer. In some cases, when a dealer buys a bond from an investor, the dealer carries the bond "in inventory." The dealer's position is then subject to risks of price fluctuation. In other cases, the dealer immediately resells the bond to another investor. Bond markets also differ from stock markets in that investors generally do not pay brokerage commissions to dealers with whom they buy or sell bonds. Rather, dealers earn revenue for trading with their investor customers by means of the spread, or difference, between the price at which the dealer buys a bond from one investor (the "bid" price) and the price at which he or she sells the same bond to another investor (the "ask" or "offer" price). The bid/offer spread represents the total transaction cost associated with transferring a bond from one investor to another. Investing Trading Bond Valuation Bond Indices » ...more Links ! ...| Reports | Analysis | Opinions | Comments |... ...Take a Break...Just Relax... ^ top Bond Valuation The interest rate that the issuer of a bond must pay is influenced by a variety of factors, such as current market interest rates, the length of the term and the credit worthiness of the issuer. These factors are likely to change over time, so the market value of a bond can vary after it is issued. Because of these differences in market value, bonds are priced in terms of percentage of par value. Bonds are not necessarily issued at par (100% of face value, corresponding to a price of 100), but all bond prices converge to par when they reach maturity. This is because if the prices do not converge, arbitrageurs can make risk-free profit by buying the bonds at a discount and collecting the face value at maturity. At other times, prices can either rise (bond is priced at greater than 100), which is called trading at a premium, or fall (bond is priced at less than 100), which is called trading at a discount. Most government bonds are denominated in units of $1000, if in the United States, or in units of L100, if in the United Kingdom. Hence, a deep discount US bond, selling at a price of 75.26, indicates a selling price of $752.60 per bond sold. (Often, bond prices are quoted in points and thirty-seconds of a point, rather than in decimal form.) Some short-term bonds, such as the U.S. Treasury Bill, are always issued at a discount, and pay par amount at maturity rather than paying coupons. This is called a discount bond. The market price of a bond is the present value of all future interest and principal payments of the bond discounted at the bond's yield, or rate of return. The yield represents the current market interest rate for bonds with similar characteristics. The yield and price of a bond are inversely related so that when market interest rates rise, bond prices generally fall and vice versa. The market price of a bond may include the accrued interest since the last coupon date. (Some bond markets include accrued interest in the trading price and others add it on explicitly after trading.) The price including accrued interest is known as the "flat" or "dirty price". (See also Accrual bond.) The price excluding accrued interest is sometimes known as the Clean price. The interest rate adjusted for the current price of the bond is called the current yield or earnings yield (this is the nominal yield multiplied by the par value and divided by the price). Taking into account the expected capital gain or loss (the difference between the current price and the redemption value) gives the "redemption yield": roughly the current yield plus the capital gain (negative for loss) per year until redemption. The relationship between yield and maturity for otherwise identical bonds is called a yield curve. » more (General relationships - Present value - Coupon yield - Current yield - Bond pricing) » Bond convexity (Calculation of convexity - Why bond convexities differ) Investing Trading Bond Valuation Bond Indices » ...more Links ! ...| Reports | Analysis | Opinions | Comments |... ...Take a Break...Just Relax... ^ top Bond Indices A bond market index is a listing of bonds or fixed income instruments and a statistic reflecting the composite value of its components. It is used as a tool to represent the characteristics of its component fixed income instruments. They differ from stock market indices in their complexity. Bond indices can be categorized based on their broad characteristics, such as whether they are government bonds, corporate bonds, high-yield bonds, mortgage-backed securities, etc. They can also be classified based on their credit rating or maturity. Bond indices are harder to replicate compared to stock market indices. This is because the average duration of the market may not be the most appropriate duration for a given portfolio. Replication can be achieved by using bond futures to match the duration of the bond index. List of bond market indices Global » Lehman Aggregate Bond Index (a family of global and regional bond indices) U.S. bonds » Lehman U.S. Aggregate » Salomon BIG » Merrill Lynch Domestic Master » CPMKTB - The Capital Markets Bond Index Government bonds » Salomon Smith Barney World Government Bond Index » J.P. Morgan Government Bond Index » Access Bank Nigerian Government Bond Index » FTSE UK Gilts Index Series Emerging market bonds » J.P. Morgan Emerging Markets Bond Index » JPMorgan GBI-EM Index High-yield bonds » CSFB High Yield II Index (CSHY) » Merrill Lynch High Yield Master II » Bear Stearns High Yield Index (BSIX) Investing Trading Bond Valuation Bond Indices » ...more Links ! ...| Reports | Analysis | Opinions | Comments |... ...Take a Break...Just Relax... ^ top » ...more Links ! » more Links Bonds issued by foreign entities: Some companies, banks, governments, and other sovereign entities may decide to issue bonds in foreign currencies as it may appear to be more stable and predictable than their domestic currency. » more (Eurodollar bond - Kangaroo bond - Maple bond - Samurai bond - Shogun bond - Bulldog bond - Matrioshka Bond - Arirang bond - Kimchi bond - Ninja loan - Formosa bond - Panda bond - State of Israel bond) What is a junk bond? » Q&A: The pros and cons of junk bonds (BBC Business) » "Investing in Bonds" (Top things to know - CNNmoney.com) » Bonds (SEC.gov) » Treasury Securities (TreasuryDirect.gov) "...The Investinginbonds.com site was created by The Securities Industry and Financial Markets Association to help educate investors. The Securities Industry and Financial Markets Association (SIFMA) represents the industry which powers the global economy. Born of the merger between The Securities Industry Association and The Bond Market Association, SIFMA is the single powerful voice for strengthening markets and supporting investors -- the world over..." » Investinginbonds.com (Investinginbonds.com) BONDS GLOSSARY A - Z Terms - Definitions - Lists Corporate Bonds BONDS RATING Investing Trading Bond Valuation Bond Indices » ...more Links ! ...| Reports | Analysis | Opinions | Comments |... ...Take a Break...Just Relax... ^ top ...| Reports | Analysis | Opinions | Comments |... | Reports | Analysis | Opinions | Comments | Real Men Trade the Long Bond In 1779, Samuel Johnson observed: "Claret is the liquor for boys; port is for men; but he who aspires to be a hero must drink brandy." These days, heroism is found in martinis and the long bond. Some twenty years ago, there was an article along the lines of "Real Men Trade Long Bonds". We would still go along with this and observe that the ten-year note, like Chardonnay, is for boys. ... Read more » (by Bob Hoye - Safehaven.com; February 09, 2006) Are Bonds About to Tank? There are a ton of patterns warning in spades that the U.S. Treasury Bond market will soon tank. Five patterns no less. We got a Megaphone pattern ... Read more » (by Robert McHugh - Safehaven.com; June 18, 2006) The US sub-prime crisis in graphics The US sub-prime mortgage crisis has lead to plunging property prices, a slowdown in the US economy, and billions in losses by banks. It stems from a fundamental change in the way mortgages are funded ... Rise of Mortage Bond Market Current Index Value of Mortage Bonds Read more » (BBC Business) Mortgage loss threatens US banks The US housing downturn may have major financial repercussions, experts have warned, as Wall Street faces up to the crisis in the sub-prime lending market. ... ...CDOs are the fastest growing segment of the bond market, with their combined value exceeding $1 trillion. ... Read more » (BBC Business) Investing Trading Bond Valuation Bond Indices » ...more Links ! ...| Reports | Analysis | Opinions | Comments |... ...Take a Break...Just Relax... ^ top Bond Market "Bond Market" Take a break... ...Take a Break...Just Relax... Bangkok train drives through a market. It's like a James Bond movie. james bond music mix & Britney Spears ...just relax... Bond Market ADVERTISEMENT Investing Trading Bond Valuation Bond Indices » ...more Links ! ...| Reports | Analysis | Opinions | Comments |... ...Take a Break...Just Relax... ^ top Sources: Wikipedia; Safehaven.com; NYSE.com; BBC Business.com; .1MTX 2007/2008