Archive for the ‘Corporate Bond Investing’ Category
Corporate Bonds Investopedia
January 18th, 2010
Question: Calculating Accrued Interest with BA II Plus?
Ok, so I'm trying to teach myself some extra bond analysis. Anyways, I'm trying to do the problem that is on Investopedia's website, but can't get the right answer. Question: On March 1, 2003, Francesca is selling a corporate bond with a face value of $1,000 and a 7% coupon paid semi-annually. The next coupon payment after March 1, 2003, is expected on June 30, 2003. What is the interest accrued on the bond?
The values I type in my calculator:
SDT = 3-1-2003
Coupon =7
RDT = 6-30-2003
RV = 100
360
2/Y
YLD = I leave it at default 0 (I don't think yield has an effect on
AI
I then go to price and hit compute, I get 102.3
I then go to Accrued Interest, I get 1.186
However, investopedia says the answer is 11.67.
Can someone please help me figure out where i'm going wrong
Answer: i got what you did
Posted in Corporate Bond Investing | 
Tags: corporate bonds investopedia, finance, income, investing, investment, investopedia | 
No Comments »
Corporate Bonds Over The Counter
December 12th, 2009
Question: bond secondary market trading?
Ask a question about bond trading in secondary bond market. Trader A from Financial Institution 1 bought some Corporate Bonds at an old premium price, sell those at a discounted price to Trader B from Financial Institution 2. The interest earned for Trader A might not offset the principle loss. Trader B then sell those same bonds to Financial Institution 3 at a new premium price, plus the interest earned, leaving Trader B a profit. All trading activities happened in secondary market (over-the-counter). The question is - why not Trader A directly sell the held bonds to Financial Institution 3 for a new premium price to get a profit? What is the cause for Trader A not getting profit but Trader B did?
Answer: Financial Institution 3 was not bidding when Trader A was asking. Supply and demand or a change in interest rates during the time between the two transactions.
The DTCC and Market Liquidity