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Interest Rate I Bonds

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Carol Said:

How do I issue bonds? Does a bank set the interest rate, or can I choose my own?

We Answered:

The bank has nothing to do with it. If you want to issue a bond, you will have to set an interest rate at which you can sell the bonds. I do not know what you mean by charging yourself.

Wayne Said:

How can GOv raising interest rate makes bonds more attractive to buy?

We Answered:

Right. No long-winded answer required. You have a firm grasp of the mechanics.

PS - To the previous respondee's point, I have about $150 million in carry trades in my portfolio at the moment. This term generally refers to bonds or derivatives you plan to hold to maturity/expiration. In this scenario, it is true that you will earn the coupon as stated when you entered the position, unaltered by any rate change. However, if rates go up and you need to close the position before it matures, you will take a mark-to-market loss.

Alicia Said:

Why is it that when the price of bonds go up, the interest rate falls?

We Answered:

It is due to the definition of what interest on a bond means. Suppose I have a bond that promises to pay $107 in one year, if I pay $100 for it the interest rate is 7% that is 107/100=1.07, however if I pay $102 the interest rate is 5% that is 107/102=1.05. It is just math not any economic principle.

Becky Said:

What is the new interest rate for i-bonds for May 1st?

We Answered:

The new inflation rate is 0.77%, down from 1.53%. Added to your fixed rate of 1.1% the total rate you will get will be 1.87%.

If you were to buy a new i-bond today the fixed rate would be 0.2%, giving you a total rate 0.97%.

    Interest Rate On Bonds

    Jim Said:How much do you think the interest rate on I bonds will be in November?We Answered:I think interest rates will be a little bit higher than they are now. The Fed has paused with their attack of increasing of short term rates ... remember what the word pause means ... it means to stop temporarily. Between now and November, I think they'll raise rates at least one more time, very possibly twice. With I-Bonds, you need to be most concerned with what the rate of inflation is (since the I-Bond rate is based on the CPI). I...

    Interest Rate Savings Bonds

    Dora Said:can someone tell me the tax rate I would have to pay on interest gained from a savings acount...Thanks?We Answered:It would whatever tax bracket you would fall into once your adjusted gross income is fully calculated. Interest earned from a savings account would be an addition to AGI. For example, if you file single, and your AGI is $50,000 you would be in the 17.4% tax bracket.Warren Said:What gives the best interest rate for savings? CD's, Mutual Funds, Bonds, Stocks?We Answered:It depends on when you need the money. For a down payment on a house, you should...

    Interest Rate Treasury Bonds

    Minnie Said:What is the relationship between US Treasury bonds and the Fed's interest rate?We Answered:Typically, "the Fed's interest rate" (the correct technical term is "federal funds rate") follows the market interest rate for U.S treasury bills with a slight lag.Oscar Said:US Long-Term Bonds, Change in Rate and Yield? Interest Rates Economy U.S Stock market: S&P 500 DJIA Investing?We Answered:"As a result, the US government has raised the rate and yield of long-term bonds -- " Actually, that's not how it works. When the US Treasury issues new paper, it does so through an auction process. The price of a...

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