If I buy this upcoming bond, do I reinvest the coupons and additional 5 million in the same bond or buy a different bond? Thanks for enlightening us always
Hi Ronald, its because I use what we call the worst case scenario when modelling these, realized I based my computation at 15% yet rates for 20 year bonds are 16.4% plus on secondary market?
Thanks for taking the time to explain. This is now clearer. How easy is it to reinvest the coupons in the same bond? Do you have to be on the lookout, is it readily available with any commercial bank? Will you get exactly the same bond like the initial one you invested in or just an equivalent period bond? Does it even matter that you look for the same initial bond?
If I purchased a 10m bond now can I be able to compound it say if I wanted to invest another 10m in 5months and have it pay out as one coupon? Can both amounts be consolidated into one bond?
Usually, only one 10yr bond will be running in the auction calendar. (It’s the same case for the other bonds, say the 2yr, 3yr, 5yr, 15yr, and 20yr bonds)
Every time you buy a 10yr bond, you’ll be buying / topping up the same bond.
You can always confirm the bond serial* number from the calendar.
If I buy this upcoming bond, do I reinvest the coupons and additional 5 million in the same bond or buy a different bond? Thanks for enlightening us always
You can re-invest in the same bond at secondary market or do both.
Thanks, so how does he calculate almost the same interest rate as the initial bond when secondary markets offer a little bit lower interest rates.
Hi Ronald, its because I use what we call the worst case scenario when modelling these, realized I based my computation at 15% yet rates for 20 year bonds are 16.4% plus on secondary market?
So leaving wiggle room of over 1.5% for future.
Thanks for taking the time to explain. This is now clearer. How easy is it to reinvest the coupons in the same bond? Do you have to be on the lookout, is it readily available with any commercial bank? Will you get exactly the same bond like the initial one you invested in or just an equivalent period bond? Does it even matter that you look for the same initial bond?
Thank you so much.
If I purchased a 10m bond now can I be able to compound it say if I wanted to invest another 10m in 5months and have it pay out as one coupon? Can both amounts be consolidated into one bond?
Usually, only one 10yr bond will be running in the auction calendar. (It’s the same case for the other bonds, say the 2yr, 3yr, 5yr, 15yr, and 20yr bonds)
Every time you buy a 10yr bond, you’ll be buying / topping up the same bond.
You can always confirm the bond serial* number from the calendar.
Thank you for the clarification
Thanks!