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Why do noninvestment-grade bonds have much higher direct costs than investment-grade issues? |
Why do noninvestment-grade bonds have much higher direct costs than investment-grade issues? Costs? They normally have much higher interest rates, which is a cost to the company issuing the bonds. Is that what you mean? That is due to the much higher risk that the bonds will default. Different bond ratings have different direct costs on the company. Ratings affect access to other financial markets like commercial paper. They may require different disclosure requirements, and make a difference in bond covenants which may contain triggers based on ratings that would require a forced repurchase of the bonds. And suppliers may require a certain credit rating. These are direct costs.. |
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As a new investor, the safe option is to invest in no-load, low-expense-ratio mutual funds from Vanguard or Fidelity. Alternative investments like unit trusts are Not safer. ...It sounds like he's getting a bond with a discount. This would mean that there are no interest payments, just the value of the bond goes up as the interest is earned. Government bonds are g... cd's ...Your understanding of investment funds is either fantastic or you have just read a prospectus . Why you ask would we not invest in these products, simple risk and reward ratio with most of these fu... Take it to a bank. They will tell you what it is and what it is worth. ...You're on the " fast track" and that's not a bad thing...just need a little more "watching" than a lot of 401 and IRA people are doing. I have had very respectable re... 3) Bonds yield $5 more interest. Bonds yield $460 Account yields $455 ...Bonds are a crazy animanl. In your example your purchasing bonds at a premium price here is my example Par is alaway 1000 1001 + stock price--Nominal Yield-- Current Yield---Yield to Call--Y... |
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