In 1999 the U.S. Treasury shut down a corporate tax shelter, promoted by accounting firm PricewaterhouseCoopers, known as the Bond and Option Sales Strategy, or BOSS. But BOSS didn't die.
In effect, a convertible consists of two bits: a normal bond, plus an option to buy equities.
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In addition to diversifying holdings, most municipal bond mutual funds offer an option for dividend reinvestment, so returns can compound over time.
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Institutional investment analysis adds the bond (usually American) option to the analysis.
Any option in the bond market right now has identifiable faults.
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Spanish officials have been keen to insist that a programme is unnecessary but careful to keep the possibility of one alive -- to ensure that investors at least have the option of ECB bond-buying to comfort them.
Or if you want the 5% coupon, your option is likely a bond with a riskier profile or a longer term, which can also ratchet risk.
The new investors may buy convertible preferred securities, that is, bond-like equity with an option to change to a set number of common shares at an established price and at an exercise date in the future.
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While bank lending remained an important source of financing, companies of all sizes and all credit ratings had the option of accessing the bond markets and, by the end of the 1980s through the issuance of high yield securities, a different universe of creditors.
To add to the experience, The World of Bond featurette will also offer a Pop-Up Trivia option to challenge even the sharpest of fans with little known facts and interesting trivia from the Bond Universe.
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When you buy a mortgage-backed bond, you are in effect buying a straight bond and then giving away a call option to the homeowners.
The owner has the option of deferring tax until the bond is cashed in.
On the former, once the bond market turns and austerity is the last option, managed decline is the result.
You are, in effect, investing in a one-year bond and at the same time selling a put option.
To profit from a housing-induced drop in short-term rates, buy the iShares Lehman 1-3 Year Treasury Bond Fund (80, SHY) or its call option.
Another option for traders is the PowerShares High Yield Corporate Bond Portfolio ETF (NYSE: PHB).
If you bought a 10-year bond with a 5% coupon in 2003, your only option as it matures in 2013 may be to accept a much lower coupon rate.
In most 401(k) plans, to move money from a stable-value account into a money-market fund or short-term bond fund, plan participants have to be invested in a riskier option for at least 90 days.
Buyers of traditional convertibles often sell issuers' shares short in order to offset the option element and leave themselves with what amounts to a pure bond.
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Draghi has proposed actions such as further bond purchases, rate cuts, and a new Long-Term Refinancing Option, which allows the ECB to lend to eurozone banks at very low interest rates.
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So Vinny, the high school graduate from New Jersey with hair coming up from under his shirt, now had to run his bond trades next to a PhD from MIT who could use mathematical models to understand the option value of the security.
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One option that you may not have heard of is the US Government Series I Savings Bond, which is currently paying a little over 3%.
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