clear understanding

Discussion in 'Fixed Income' started by Louffixx, May 10, 2020.

  1. Louffixx



    i would like to have a clear exemple of an investment in a corporate bond, like NETFLIX.

    the maturity date is november 2026.
    I buy 5 bonds at USD 104.05
    on the 15 may, i got pay the interest of the coupon, 4.375%
    i hold it for another 2 years, so i will receive another 2 times the interest and then i want to exit and get my money back.

    or if i wait until the final coupon date in 2026, i will receive my investment back automaticaly ?

    How does it work exactly ?

    and the accrued interest..... is me paying 2.10% (based on 5 days) of my total investment because i buy the bonds before the payement date.

    Thanks a lot for your help.
  2. Louffixx


    nobody knows ???
    please guys...
  3. Nobert


    What is the return of those bonds ?
    How much of the profits, do they generate ?
  4. Louffixx


    they generate 4.375% profit per year, per bonds.
    the return on those bonds ????
    the yield of 3.62% is something that i dont understand....


    i think i will pay the (trading price at around 104 USD) but i will only get the interest on 100

    then there is the denomination wich is at 1000. does it mean that i have to invest 1000 USD minimum ?
  5. Nobert


    Why would you buy bonds, when you could average in SPY/VOO/QQQ.

    There returns of the index is roughly 8% after inflation.

    Now bond, after inflation -

    1% ~ 2%.

    Going to sleep. Il check the answer tomorrow.
    Louffixx likes this.
  6. xandman


    You are paying above Par of $100 because the bond price includes accrued interest which is due very soon. At maturity, you will be paid the accrued interest plus the Par value of the bond.

    Additionally, it is possible for a bond to trade above Par when the market decides to accept a lower yield-to-maturity than the original coupon provides.

    e.g. When benchmark interest rates have dropped or the company's financial position improves substantially putting them in a much better financial standing.
    Nobert likes this.
  7. Louffixx


    ok, so for exemple:

    i buy 5 bonds, at the trading price of 105USD ( i thought the above part, the 5usd was because of the high demande and so it went up from 100 to 105)

    then i hold it for 2 years, i receive the interest, and i can sell it anytime ?
    i sell it and i get back the face value, so the 100 USD ?
    if you can explaine me bond yield ? i look on google and really i dont understand.

    it says, bond yield is the return an investor realize, but the coupon interest is diffrent from the yield.....

    ps @ norbert, why would i buy bonds..... because its a safe way to park money and to have nice % return. no ????
  8. Nobert


    It's safe - yes.
    Nice return - i don't think so.

    All that you get, is safety - for 3 - 4 times less.

    It's your call tho, just shared my opinion.

  9. Louffixx


    With what is going on now, the SP500 might not be so good for the years ahead.
    with corporat bonds at least you have a nice % wich is kind of gurantie.
    Nobert likes this.
  10. Louffixx


    guys,,, if sombody can explain me with an exemple from A to Z with all details.
    i dont understand what happen if the price of the bond drop.
    from 100 to 98 ...what happen to the bonds holder ?

    please guys
    #10     May 16, 2020