(3) Zero-coupon bonds are actually common.
(a) Karen Rogers, How to Buy Zero Coupon Bonds. Zacks Investment Research, undated
https://finance.zacks.com/buy-zero-coupon-bonds-6725.html
("Zero coupon bonds, also known as zeros, are distinct in that they do not make annual interest payments. The bonds are sold at a deep discount, and the principal plus accrued interest is paid at the bond’s maturity date. The less you pay for a zero coupon bond, the higher the yield")
(b) Lisa Smith, Advantages and Risks of Zero Coupon Treasury Bonds. Investopedia, updated Dec 11, 2018
https://www.investopedia.com/art ... ro-coupon-bonds.asp
("Zero-coupon bonds are bonds that do not make any interest payments (which investment professionals often refer to as the 'coupon') until maturity. * * * Zero-coupon bonds come in many varieties. They may be issued by federal [US Deaprtment of Treasury], state or local governments [municipals or munis] or by corporations. Perhaps the version most familiar to many investors is the old Series EE savings bonds issued by the U.S. Treasury that were often given as gifts to small children. These bonds were popular because they could be purchased in small denominations. For example, a $50 bond could be purchased for $25. The child would keep the bond for several decades and then, when it matured, received $50. While the terms of the savings bond program has changed, and bonds are only available in electronic form, they still exist – and are still a valid example of how zero-coupon bonds work. * * * These entities [zero-coupon bonds or zeros] take a regular bond and remove the coupon to create a pair of new securities. This process, often referred to as 'stripping' (as the coupon is stripped away from the debt instrument), results in a zero-coupon bond that can be sold to investors")
(4)
(a) Bond Basics: An Investor's Guide to the Many Meanings of Yield. American Association of Individual Investors (AAII), undated
https://www.aaii.com/investing/a ... y-meanings-of-yield
("Yield to maturity (YTM) is a more comprehensive measure of potential return than 'current yield.' * * * YTM is the measure most widely quoted by brokers when selling individual bonds. * * * Total return for bonds consists of whatever you earn in interest income, plus or minus changes in the value of principal. (To be totally accurate, you would also subtract taxes and commission expenses from return)")
Please read two sections (only): yield and total return.
(b) Waiting for Death. "Woolly Thoughts" blog in Sentix.de, Aug 8, 2019 (yes, prior to issuance of the 30-year bond)
www.sentix.de/index.php/en/Wooll ... ting-for-death.html
consecutive paragraphs:
"Negative business [which is sectional heading]
"After all, what does this mean for those investors who today acquire German government bonds and hold them to maturity?
"If an investor today invests his money for three years in government bonds, he "receives" a negative interest rate of -0.89%. That is, he loses within three years surely 2,9% of his money. If, for example, he buys the 0% federal bond with a maturity of 7.10.2022 [Oct 7, 2022] today for 102.89%, he will receive only 100% back at maturity. This is not however the whole truth, because the investor must consider also still the inflation. This is currently 1.7% in Germany. This adds up to a purchasing power loss of around 5% within three years, provided the inflation rate remains unchanged. Makes a stately loss of value of more than 8% within 3 years!
"The calculation looks even starker if one were to buy 10-year federal bonds today. A non-interest-bearing federal bond with maturity 15.8.2029 currently costs 105.825%, so that a guaranteed minus of 5.8% is already certain for the investor at the time of purchase. In addition the inflation comes of 1-2%, so that one will lose with BUNDS within 10 years loosely 15-20% - with federal guarantee. In the meantime, 30-year bonds also have a negative yield, so that here, too, at 1.5% average inflation in 30 years, a minus of about 36% occurs.
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发表于 8-24-2019 12:25:20
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