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Topic: Inflation indexed bond


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In the News (Fri 1 Jan 10)

  
 Pick Brains - Types of bonds
Inflation-indexed bonds, in which the principal (or "face" value) is indexed to inflation, which causes higher interest payments (interest is calculated as the coupon rate multiplied by the principal amount).
TIPS (Treasury Inflation-Protected Securities) and I-bonds are examples of inflation indexed bonds issued by the U.S. government.
Subordinated bonds are those that have a lower priority than other debts of the issuing corporation, so if there is not enough money to pay all the company's debts, the "senior" (higher-priority) bonds are paid first, and the subordinate bonds are paid out of what money, if any, is left.
www.pickbrains.com /money/types-of-bonds   (609 words)

  
 Path to Investing — Allocate Your Assets with Roger Ibbotson: Treasury Inflation-Protected Securities
TIPS are inflation-indexed bonds and notes that are issued by the U.S. Treasury.
If the inflation rate is 4% the first year you hold the bond, the bond principal will increase to $10,400 and your first annual interest payment will rise from $300 to $312 (or 3% of $10,400).
So, if you bought a $10,000 bond and inflation rose 8% during the life of the bond, you would receive $10,800 at maturity.
www.siainvestor.com /trips/allocate/alternative_031.htm   (609 words)

  
 Encyclopedia: Treasury Bonds
Inflation-indexed bonds are bonds whose principal and coupon are indexed to inflation, cutting out inflation risk.
Treasury bonds are commonly issued with maturity dates of ten and thirty years.
However, the U.S. Treasury announced in May 2005 that due to a flattening of the yield curve (the difference between short-term bond yields and long-term bond yields is narrowing) and due to demand from pension funds and large, long-term institutional investors, the 30-year Treasury bond might be re-introduced in early 2006.
www.nationmaster.com /encyclopedia/Treasury-Bonds   (1077 words)

  
 Bond - Art History Online Reference and Guide
Inflation-indexed bonds, in which the principal (or "face" value) is indexed to inflation, which causes higher interest payments (interest is calculated as the coupon rate multiplied by the principal amount).
Bonds are securities but differ from shares of stock in that stock is an ownership interest (termed "equity"), but bonds are "debt": Therefore a shareholder is an owner, but a bond-holder is a creditor.
Bonds do suffer from less day-to-day volatility than stocks, and bonds' interest payments are higher than dividend payments that the same company would generally choose to pay to its stockholders.
www.arthistoryclub.com /art_history/Bond   (2423 words)

  
 Print Message
The Vanguard® Inflation-Protected Securities Fund invests in TIPS (also called Treasury inflation-indexed securities) and inflation-indexed securities issued by other U.S. government agencies.
By contrast, price fluctuations for conventional Treasury securities are determined by changes in real interest rates and inflation expectations, as well as in changes of the risk premium for future inflation.
With conventional Treasuries, real yield and expected inflation are combined in the quoted yield to maturity.
www.suite101.com /print_message.cfm/investing/12763/861514   (2423 words)

  
 Bond Government Us Yield : Investing and Trading
Table of contents showTocToggle("show","hide") 1 Effects of Debt 2 Bonds 3 Inflation Indexed Debt 4 Nonstandard Approaches to Debt 5 Arguments against debt 6 Debt forgiveness 7 Type of debts 8 See also Effects of Debt Debt allows people...
See live article   Bond For alternate meanings, such as chemical bond, see bond (disambiguation) In finance and economics, a bond or debenture is a debt instrument that obligates the issuer to pay to the bondholder the principal plus interest.
The holder of a zero coupon bond is entitled to receive a single payment, usually of a specified sum of money at a specified time in the future.
www.dbg-ja.com /64-Bond-Government-Us-Yield.html   (846 words)

  
 Masisa S.A. Completes Corporate Bond Placement for US$163 Million
SANTIAGO, Chile, Jan. 12 /PRNewswire-FirstCall/ -- MASISA S.A. ("Masisa" or "the Company"), a leading Latin American forestry and wood products company, announced today the completion of a local bond placement for approximately US$163 million, denominated in Unidades de Fomento ("UF"), a Chilean inflation-indexed currency unit.
The bond placement, which was completed today was comprised of two series: (i) Series D: corresponding to approximately US$68.6 million, with a maturity of 7 years, placed at an annual rate of 4.59%.
Terms and conditions, including restrictions on redistribution, apply.
www.prnewswire.com /cgi-bin/stories.pl?ACCT=104&STORY=/www/story/01-12-2006/0004248360&EDATE=   (348 words)

  
 U.S. Treasury - Office of Domestic Finance - Treasury Promotion of Inflation-Indexed Securities
Almost $200 billion of TIPS outstanding, and about $500 billion of inflation-indexed securities outstanding worldwide.
Treasury is committed to developing the market for Treasury Inflation-Protected Securities (TIPS).
Treasury Committed to TIPS Fixed-Income Summit, Palm Beach, FL Treasury Deputy Assistant Secretary (DAS) Timothy Bitsberger to The Bond Market Association
www.treas.gov /offices/domestic-finance/key-initiatives/tips.html   (348 words)

  
 The Halpern Group presents the safest Section 130 Structured Settlement
Treasury bills, notes, and bonds are the world’s safest investments -- and they are -- then you might say Treasury Inflation-Indexed Securities are the safest of the safest.
TBSS - Treasury Bond Structured Settlement In Depth
All assets held in the trust remain protected by the United States Government.
www.halperngroup.com /SSettlements/Safest130.htm   (209 words)

  
 Investsearch - Books for Traders & Investors - InvestorBookstore.com - wallstreetdex.com
Handbook of Inflation Indexed Bonds - FABOZZI^ FRANK J.; BRYNJOLFSSON^ JOHN
Beating the Dow with Bonds: A High-Return^ Low-Risk Strategy for Outperforming the Pros Even when Stocks Go South - O'HIGGINS^ MICHAEL B. Beating the Dow with Bonds: A High-Return^ Low-Risk Strategy for Outperforming the Pros Even When Stocks Go South - MCCARTY^ JOHN; O'HIGGINS^ MICHAEL
Al Frank's New Prudent Speculator: The Master of Value Investing Shows You How To Pick Winning Stocks^ Revised Edition: The Master of Value Investing Shows You How To Pick Winning Stocks^ Revised Edition - FRANK^ AL All About Bonds and Bond Mutual Funds: The Easy Way to Get Started - FAERBER^ ESME
www.investorbookstore.com /investor_books.html   (209 words)

  
 Treasury Inflation Protected Securities - TIPS
A special type of Treasury note or bond that offers protection from inflation.
Like other Treasuries, an inflation-indexed security pays interest every six months and pays the principal when the security matures.
The difference is that the coupon payments and underlying principal are automatically increased to compensate for inflation as measured by the consumer price index (CPI).
www.investopedia.com /terms/t/tips.asp   (209 words)

  
 Finance Topic: Bonds
Summary of Treasury Inflation-Indexed Securities Defines the basic terms of these bonds, such as how principal and interest rates are calculated, how the inflation rate is set and the basis on which the value of the bonds is calculated at maturity.
Also, refer to the magazine's brief description of How Inflation-Indexed Bonds Work to see an example of how the principal and interest would be calculated, based on the example's interest and inflation rates.
How bond funds vary based on their blend of bond type (corporate, municipal, etc.), credit quality (U.S. treasury, investment grade, etc.) and average maturity (short, medium or long-term).
www.swcollege.com /web_resources/bonds.htm   (209 words)

  
 Bureau of the Public Debt : I Bonds To Earn 4.08% When Bought From November Through April 2003
Treasury's inflation-indexed I Bonds are designed to offer all Americans a way to save that protects the purchasing power of their investment by assuring them a real rate of return above inflation.
The earnings rate for I Bonds is a combination of a fixed rate, which will apply for the life of the bond, and the inflation rate.
Information about savings bonds is available at Public Debt's website at www.savingsbonds.gov. Check out our Savings Bond Calculator to see how easy it is to find out what your bonds are worth, what they're earning, and even keep track of them.
www.savingsbonds.gov /com/comi1102.htm   (209 words)

  
 The U.S. Treasury Market and the New Inflation-Indexed Securities
THE U.S. The United States Department of the Treasury has decided to offer a new type of security, referred to as a Treasury inflation-indexed security, whose principal amount will be adjusted for inflation.
The Treasury Department believes the issuance of inflation-indexed securities will reduce interest costs to the Treasury over the long term and will increase the types of debt instruments available to investors in the U.S. financial markets.
By providing this general information, The Bond Market Association makes neither a recommendation as to the appropriateness of investing in fixed-income securities nor is it providing any specific investment advice for any particular investor.
www.investinginbonds.com /info/igiis/market.htm   (209 words)

  
 Wikinfo Bond
Inflation Indexed bonds, in which the principle (or "face" value) is indexed to inflation.
The bondholder receives the full face value at maturity, and the "spread" between the issue price and redemption price is the bond's yield.
In finance and economics, a bond or debenture is a debt instrument that obligates the issuer to pay to the bondholder the principal plus interest.
www.wikinfo.org /wiki.php?title=Bond   (926 words)

  
 CFA Digest: Items of Interest
The author points out the importance of analyzing together the impact of taxation and inflation, because as inflationary expectations increase, the indexed bond market will become segmented and attractive only to tax-exempt institutions and low tax bracket investors.
Roll also illustrates how different structures react differently to changes in real interest rates and how stripping cash flows of indexed bonds and recombining them may satisfy more investors.
For example, tax-exempt defined-benefit pension plans may prefer the employment cost index over the CPI and the long-term zero-coupon bond structure over the Canadian structure because these features more closely match the nature of their liabilities.
www.aimrpubs.org /cfa/issues/v27n3/full/c0270083b.html   (926 words)

  
 Interest Rate Inflation Risk
Inflation-Indexed Treasury Bonds: Cash Flows, Taxes and Simulated Returns
by Douglas R. Kahl, Ph.D., and Jerry L. Stevens, Ph.D. are designed to eliminate inflation risk by...
When you buy a 30-year Treasury bond, the biggest risk you are taking is that inflation...
risk." For the modern investor, interest-rate risk is virtually synonymous with inflation risk.
www.affordinterestrates.com /interestrateinflationrisk.html   (185 words)

  
 3rd Qtr 1995 FRBKC Economic Review
With an indexed bond, the interest and maturity value are adjusted by the rate of inflation over the life of the bond.
This ongoing conflict explains why Americans have seen revolutionary developments in large-dollar payments but only evolutionary developments in small-dollar and retail means of payment.
Second, he explores why progress has been so slow in small-dollar and retail payments by examining some of the barriers that have limited payments system progress.
www.kc.frb.org /publicat/econrev/er95q3.htm   (1318 words)

  
 Chile unit of PSEG utility bond.htm in Business Recorder on January 19, 2003
The bonds issued were denominated in Unidad de Fomento, an inflation-indexed monetary unit in Chilean pesos.
Saesa divided the debt issue into a $60.5 million, 7-year bond with a coupon rate of 5.39 percent and another $53.5 million bond maturing in 21 years at a rate of 6.6 percent, the unit said in a statement.
The funds will be used to cover $160 million in short-term debt maturing in March and April 2003.
www.paksearch.com /br2003/Jan/19/Chile%20unit%20of%20PSEG%20utility%20bond.htm   (176 words)

  
 World Bank Treasury : Debt Issuance, News for Investors
Most of the longer-term local bond issuance has been in the form of inflation-indexed notes, offering a real rate of return adjusted for inflation in consumer prices.
These debt instruments are linked to the Unidad de Fomento (UF), the CPI index created in 1967 and published daily by the National Statistics Institute of Chile, which is used to index a broad array of financial transactions, including time deposits, mortgages and corporate loans and bonds.
The World Bank took advantage of the growing investor demand for UF-linked notes in Chile and abroad, and opened the way for further international issuance in that instrument.
www.worldbank.or.jp /debtsecurities/000531.htm   (610 words)

  
 War bonds: Despite patriotic fever, they'll take a long time
Take the example of the Series I bond, an inflation-indexed U.S. savings bond.
The Treasury employee said it would take a year to get modified Series EE bonds into buyers' hands, and that would be "super pushing it." Designing the look, making or altering the printing plates, getting materials, printing and distributing are tasks that have to be done sequentially and can't be done all at once.
He doesn't even want to talk about how long it would take and what the procedure would be.
www.bankrate.com /brm/news/sav/20011017c.asp   (908 words)

  
 Bookworkz.com: Advanced Fixed Income Analytics
Wesley Phoa covers a variety of important topics within the bond markets, including inflation-indexed bonds, prepayment risk and modeling, term structure models, credit spread and volatility risk, and risk measures and return attribution.
Advanced Fixed Income Analytics helps fixed income professionals stay abreast of the latest developments in the field by providing a practical account of quantitative methods in the fixed income market.
The information and guidance of Advanced Fixed Income Analytics has a strong emphasis on empirical analysis and practical applications that will prepare you for anything within the fixed income market.
www.bookworkz.com /construction/finance/1883249341.html   (908 words)

  
 SSRN-The Ideal Inflation Indexed Bond and Irving Fisher's Impatience Theory of Interest in an Overlapping Generations World by John Geanakoplos
Geanakoplos, John, "The Ideal Inflation Indexed Bond and Irving Fisher's Impatience Theory of Interest in an Overlapping Generations World" (July 2003).
Keywords: Impatience, Theory of interest, Inflation indexed bond, Konus index, Capital asset pricing, Efficiency, Overlapping generations, Land
I prove in the context of a multicommodity CAPM world that the best welfare improving bond pays the minimum money needed to achieve the same utility, and not the minimum needed to buy an ideal commodity bundle.
papers.ssrn.com /sol3/papers.cfm?abstract_id=426822   (289 words)

  
 Robert E. Fisher
Comments on John Geanakoplos's "The Ideal Inflation-Indexed Bond and Irving Fisher's Impatience Theory of Interest with Overlapping Generations.
Reminiscences of Irene Fisher Coon, R.N., About the Early History of Orthopedics Surgery at Sioux Valley Hospital
Exchange-rate expectations and nominal interest differentials: A test of the Fisher hypothesis (Working paper - National Bureau of Economic Research)
www.interference.com /webstore/us/books/author/Robert+E.+Fisher-3.htm   (289 words)

  
 Forbes.com: Chile issues bonds in final leg of debt program
The bonds, issued in the inflation-indexed Unidad de Fomento currency unit, have a coupon rate of 5.02 percent.
SANTIAGO, Chile, Oct 15 (Reuters) - Chile's government issued $26 million worth of 20-year bonds in local currency on Wednesday, the first tranche of a $112 million bond issue to be made over the next three weeks to reschedule debt and finance the budget deficit.
Finance Minister Nicolas Eyzaguirre said market demand for the notes, mainly from the banking sector, was about eight times the offer.
www.forbes.com /home_asia/newswire/2003/10/15/rtr1109855.html   (369 words)

  
 reference_tenney.doc
Interest Rate Caplet The caplet accumulates interest from t’ to T. The “LIBOR” rate c is defined by 1 = (1 + (T-t’) c) P(r,T-t’) where P is the price of a zero coupon bond at t’ with maturity T, when the short term rate is r (we assume this is the only state variable.
For equity indexed annuities, the interest rate is very important if the lapse rate is a function of the interest rate.
In the 2-factor CIR example, this requires using the inflation rate to determine the process on the interest rate, as well as the real rate of interest.
www.mathematical-finance.com /papers/reference_tenney.doc   (3678 words)

  
 Bookworkz.com: Advanced Fixed Income Analytics
Wesley Phoa covers a variety of important topics within the bond markets, including inflation-indexed bonds, prepayment risk and modeling, term structure models, credit spread and volatility risk, and risk measures and return attribution.
Advanced Fixed Income Analytics helps fixed income professionals stay abreast of the latest developments in the field by providing a practical account of quantitative methods in the fixed income market.
The information and guidance of Advanced Fixed Income Analytics has a strong emphasis on empirical analysis and practical applications that will prepare you for anything within the fixed income market.
www.bookworkz.com /construction/finance/1883249341.html   (3678 words)

  
 bi960522.html
The Federal Government, through the Ministry of Finance and Public Credit, will offer Federal Government Development Bonds denominated in UDIs (Udibonos), destined to those investors who wish to guarantee a pre-determined real interest rate by acquiring inflation-indexed bonds.
The nominal value of each bond shall be 100 investment units (UDIs).
The real interest rate accrued by the Udibonos shall be fixed and the interest shall be paid each 182 days.
www.shcp.gob.mx /english/docs/bonds/bi960522.html   (426 words)

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