Hi all,
I have a question in relation to Treasury Traded Bonds traded from ASX.
http://www.asx.com.au/asx/markets/interestRateSecurityPrices.do?type=GOVERNMENT_BOND
When I look at Yield, many with a high coupon interest bonds as well show a very low yield value. I believe this tells if you keep your money till maturity rate, your return of investment will be low since offer prices for each unit are trading well above $100 face value.
The question that I have is that say you invested $10,000 for a traded value of $110 per unit for a $100 face value for coupon interest of 6%. You will get 90 units (10,000/110) which will pay a $540 (6x90) for year yielding 5.4% for $10,000 invested.
Assuming I can sell it again for $110 a unit, I stand to make this profit rather than awaiting 10 years for which Yield to Maturity yield is 2.5% (where I will be paid $100 per unit instead of $110 per unit I traded for). Is that correct or am I missing something?
I have a question in relation to Treasury Traded Bonds traded from ASX.
http://www.asx.com.au/asx/markets/interestRateSecurityPrices.do?type=GOVERNMENT_BOND
When I look at Yield, many with a high coupon interest bonds as well show a very low yield value. I believe this tells if you keep your money till maturity rate, your return of investment will be low since offer prices for each unit are trading well above $100 face value.
The question that I have is that say you invested $10,000 for a traded value of $110 per unit for a $100 face value for coupon interest of 6%. You will get 90 units (10,000/110) which will pay a $540 (6x90) for year yielding 5.4% for $10,000 invested.
Assuming I can sell it again for $110 a unit, I stand to make this profit rather than awaiting 10 years for which Yield to Maturity yield is 2.5% (where I will be paid $100 per unit instead of $110 per unit I traded for). Is that correct or am I missing something?
