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BONDS 101 PUBLIC FUNDS INVESTING. Prepared for: Presented by:. Paul Jarvis Managing Director 206-365-3000 877-707-7787. Member SIPC and FINRA. Source: Bloomberg. BOND BASICS - WHAT IS A BOND?. $100 1 Year 10.00% = 110 10%. BOND BASICS - WHAT IS A BOND?.

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bonds 101 public funds investing

BONDS 101PUBLIC FUNDS INVESTING

Prepared for:

Presented by:

Paul Jarvis

Managing Director

206-365-3000

877-707-7787

1

Member SIPC and FINRA.

bond basics what is a bond
BOND BASICS - WHAT IS A BOND?

$100 1 Year 10.00% = 110 10%

4

bond basics market rates went up to 12
BOND BASICS - MARKET RATES WENT UP TO 12%

Interest rates for similar bonds went up to 12%.

8

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BOND BASICS

The difference between 1.00% and 1.01% = 1 Basis Point

The $ value of 1 Basis Point on $1 million

Invested for 1 year = $100

In other words: 1 BP/$1MM/1 Year = $100

1 BP/1MM/6 Months = $50

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bond basics a typical bond
BOND BASICS - A TYPICAL BOND

Don’t forget about interest on interest….

12

bond basics sell the bond before maturity no rate change
BOND BASICS – SELL THE BOND BEFORE MATURITY: NO RATE CHANGE

SELL

RECEIVE

NOTE: Actual results may vary depending on original maturity of bond and length of holding period

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bond basics a typical bond that is callable
BOND BASICS - A TYPICAL BOND THAT IS CALLABLE

Yield to Call = 1.00%

Yield to Maturity = 1.00%

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bond basics a typical bond that is callable with 3 call dates
BOND BASICS - A TYPICAL BOND THAT IS CALLABLE WITH 3 CALL DATES

Yield to Call = 1.00%

Yield to Maturity = 1.00%

19

bond basics a callable bond price is at a premium
BOND BASICS - A CALLABLE BOND, PRICE IS AT A PREMIUM

Yield to Call = .75%

Yield to Maturity = 1.85%

20

bond basics a callable bond price is at a discount
BOND BASICS - A CALLABLE BOND, PRICE IS AT A DISCOUNT

Yield to Call = 1.30%

Yield to Maturity = .90%

21

bond basics a typical bond that is callable1
BOND BASICS - A TYPICAL BOND THAT IS CALLABLE

Yield to Call = 1.00%

Yield to Maturity = 1.00%

22

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The information provided, while not guaranteed as to its accuracy or completeness, has been obtained from sources believed to be reliable. This is for informational purposes only. Because of individual client requirements, it should not be construed as advice designed to meet the particular needs of any client. This information should not be used as the primary basis of investment decisions. Contact your financial and tax advisors before implementing any strategies outlined in this material. Member SIPC and FINRA.

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