I've just started looking at bonds and looking at the Ameritrade website and corporate bonds, I hope someone will politely tell me what the following information is telling me including what the category abbreviations are:Let's start with assumption that "coupon" is the interest rate they pay?YTM & YTW.....don't have a clue It say YTM 2.33 and underneath is says MATPrice is $109.05, again I assume that is what I would pay for one bond?Next: 191216AV2 250 (again QTY min?) Industrial 10This may sound like I have no business fooling around with bonds, but I have to start somewhere, so please be kind.
Bobcatkitty,You wrote, Let's start with assumption that "coupon" is the interest rate they pay?Yes. The stated coupon should be the rate paid annually. (I think some sites list the amount paid per period. You may also need to know the payment frequency/schedule.)Also, YTM & YTW.....don't have a clue It say YTM 2.33 and underneath is says MATYTM = Yield to Maturity. This is the yield you will get if the bond pays out through it's maturity date.YTW = Yield to Worst. This is the yield you will get if the bond is called at the earliest or least favorable time to you if you bought it today.MAT = is usually short for Maturity date.And, Price is $109.05, again I assume that is what I would pay for one bond?Price = The price is stated as a percentage of par value. 100 means you would pay $1,000 for a bond with a $1,000 par value. A price of 109.05 means you would pay $1,090.50.Also, Next: 191216AV2 250 (again QTY min?)191216AV2 is a CUSIP ( http://www.sec.gov/answers/cusip.htm ), which is a standardized code that identifies registered investment securities. This security is a Coca Cola bond that matures in 2021 with a 3.30% coupon.I'm assuming the 250 is associated with the minimum QTY (abbreviation for the word quantity). So what this appears to be saying is that the seller will sell a minimum of 250 bonds. At a price of 109.05, a minimum purchase will set you back a cool $272,625.00.Finally, Industrial 10Coca Cola (KO) is being classified as an industrial issue. Personally I'd say it's a consumer product. FINRA classifies it as "Beverages/Soft Drinks".For additional reading, you might want to check out the board's FAQ: http://boards.fool.com/bonds-fixed-income-investments-faqs-2...- Joel
$272K huh? I'll get right on that!!!!!Thank you so much for the clarifications of the code abbreviations. I will read the Bobd faq as well, thank you for that suggestion.And a special thank you for your gracious answers.
Bobcatkitty,You wrote, And a special thank you for your gracious answers.No problem. We all start as beginners. Just remember the broker has only so much room to pack that information into a report or table, so they tend to abbreviate.- Joel
bobcati would add one caveat. in terms of perspective, please keep in mind, at this point of the interest cycle, we are at the worst possible moment to be buying specific types of corps -- corps that would most likely be suitable for someone with your experience level; meaning possibly longer term, higher credit quality.there is an inverse relationship that exists right now in the marketplace which is>> the longer til redemption + the higher credit quality + the higher coupon = insane premiums to face valuethere are corps out there trading at 30%-40% premiums to par. at this stage of the game, the risk reward really makes no sense. yes of course you could lock in your yield right now immediately; a great advantage of buying individual corps vs. a mutual fund, because all you have to do is hold til redemption.however a 12-18 months from now, most likely the majority of the good caliber stuff will be cheaper and yields will be better.right now, the only way to offset some of the interest rate cycle inevitable phenom risk, would be to take on short term <3-4 years maturing corps that have some degree of credit risk trading slightly above/at/or below face value. this would offset some or a good chunk of a superior rated/classified corp trading at a premium to par. basically it boils down to trade offs. however this kind of trade would most likely not be suitable for you at this point in time of your development. but you are definitely on the right track. there is allot of money to be made in buying/trading individual corps. run as many scans as possible using different parameters and watch price action.one last footnote that charlie has submitted numerous DD posts on and that i would chime in on with my own opinion here is that you CAN use ETF's, CEF's, and even MF's to put on a trade. not park your money there indefinitely as an investment, because then you are at the mercy of the interest rate cycle having locked your funds into a specific NAV at a certain day in time. BUT lets say right now you are thinking of getting short or long for a limited amount of time; a more simplistic approach in doing so would be looking at one of the vehicles mentioned above and then getting out at a point in the near term future.another way to hedge your long individual corp portfolios is also looking at one of the inverse short themed CEF's or ETF's as well and even going long some VIX.
Thanks for you comments. I feel more like Bruce Doe at the moment, as our retirement life (18 years so far) is changing more rapidly than either of us imagined, DH is 69, I'm 68, and the only good thing I can say about things is it is giving us time to think decisions through.I believe after what I was able to learn yesterday, individual bonds is not the place for us to fool around.Kitty
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