Bond Quotes As Indicators
Bond Quotes As Indicators
One way to examine a bond’s performance is to look at bond indexes. An index is a benchmark that reflects the performance of a select sample of bonds. You can find some representative bond indexes in the financial section of most daily newspapers. Let’s look at how to interpret some of the symbols you will find there.
Things To Know
- An index is a benchmark that reflects the performance of a select sample of bonds.
Because of the sheer number of bonds on the market (over 1.5 million), it isn’t possible to list every bond price in the paper each day. Only a small percent of bonds trade each day, but most bonds respond similarly to changes in interest rates. This allows you to get a good sense of a bond’s worth by comparing it to newspaper indexes.
How to read a bond quote
The number listed after the bond’s name is the original interest rate the bond paid when it was first issued. The number immediately following the original interest rate is the year the bond matures. For example, a bond listing that says ATT8½10 indicates a bond from AT&T with an original interest rate of 8.5 percent maturing in 2010.
The next column, "Cur Yld," stands for current yield. The current yield is the original annual interest divided by the current market price. You can find the current market price by looking under the "Close" column that shows you the last price at which the bond traded on that day.
"Volume" shows you how many bonds were traded that day. The "Change" column shows you the change in a bond’s price as compared to the previous day, reported as a percentage of its face value. For example, a change of "+2" indicates that the bond’s price went up two percent (or $20 for a $1,000 bond).
With any major daily newspaper, then, you can track the performance of a bond issue, the bond market as a whole, or specific segments of the bond market.
