Latest / The Issue at Hand by Madison Investments
Don’t Judge A Bond By Its Coupon
At any given time, the bonds in a portfolio may have coupon rates above or below current market rates. When interest rates move, clients may question why their bonds have coupons that are lower, sometimes significantly lower, than the market rate. But coupon is only one part of the return equation. The price you pay for a bond, the income it generates, and how its price moves all matter when evaluating its total return.
In this episode, Chris Aleman and Mike Sanders break down the different ways to evaluate a bond’s return, including current yield, yield to maturity (YTM), yield to call…
The skinny
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