Rich Carreiro
September 2nd 03, 04:25 AM
(kat) writes:
> hmmm... why would anyone wanna buy an I-bond?... what is sooo
> appealing?...
How about a guaranteed real return, zero risk of default,
and guaranteed not to lose any money?
> aren't there high rated corporate bonds paying more, or
I-bonds currently pay 4.66%. How far out the yield curve do you have
to get to get a high-rated corporate bond with a 4.66% yield to
maturity? And what do you think will happen to the value of that bond
when interest rates rise? Remember, if a negotiable bond has a
duration of N years, its value will drop by N% for every percentage
point increase in interest rates. That doesn't happen with savings
bonds.
--
Rich Carreiro
> hmmm... why would anyone wanna buy an I-bond?... what is sooo
> appealing?...
How about a guaranteed real return, zero risk of default,
and guaranteed not to lose any money?
> aren't there high rated corporate bonds paying more, or
I-bonds currently pay 4.66%. How far out the yield curve do you have
to get to get a high-rated corporate bond with a 4.66% yield to
maturity? And what do you think will happen to the value of that bond
when interest rates rise? Remember, if a negotiable bond has a
duration of N years, its value will drop by N% for every percentage
point increase in interest rates. That doesn't happen with savings
bonds.
--
Rich Carreiro