11B Investing Basics and Evaluating Bonds #2. Recall the concept of asset allocation. 11- 1. One Effect of Asset Allocation: A Weighted Total Return. Ultraconservative “Investors” Are Really Just “Savers”. People who invest very conservatively
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Recall the concept of asset allocation
Do You Want to Lend Your Money or Own an Asset?
10% return, 7.5% after taxes (25% tax bracket), 4% inflation, real rate of return of 3.5% after taxes and inflation
Call Feature of Bonds
What is the effect of called back bonds on investors?
Comparable interest rate = 5% (.05) = $1,175
Comparable interest rate = 6.5% (.065) = $903.85
When a bond is first issued, it is sold in one of three ways:
What does this graph tell you?