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10 Yr Treasury Bond

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Colleen Said:

if I buy a 10 yr treasury note, say 5.25% and then sell it in 1 yr. Is my return same as buying 1 yr bond?

We Answered:

Answer is NO

Bond yield is directly tied to the perceived risk from the market. While it is accurate that for a government treasury note is most sensitive to interest rate, elimination of interest risk does not make bonds equal to each other.

Liquidity risk is something to consider (tying up your money for 10 years as opposed to having it free after 1 year). Transaction cost should also be considered (redeeming the 1 yr bill while you incur broker fees for selling the 10 yr note).

There are other risks, just can't name it off the top of my head. Basically, yields have to be higher to compensate for risk. In your dreamed scenario which interest rates don't change, the 10 yr note will still yield higher than the 1 year bill because investors want to be compensated for liquidity.

Vivian Said:

best bond choice for less risk - aaa bond - 10 yr mat, bbb perpetual,bbb - 10 yr mat, aaa - 5 yr, BBB 5 yr?

We Answered:

The best way to mitigate default risk is to buy a higher rated bond, so aaa is your best option (if you don't want to buy US Treasury Bills).

The best way to mitigate interest rate risk is to buy a shorter term bond, this way if the interest rates change greatly you'll be able to reinvest at the new rate sooner (this is also why interest rates *tend* to be lower for shorter term bonds, because you are assuming less risk due to the short term).

So, of them all, aaa - 5 yr has the least risk exposure.

Edit: By the way, a perpetual bond (or a perpetuity) is a security that makes an interest payment forever, without any principal payback, which give it the greatest interest rate exposure of the bunch.

Thomas Said:

why is time value concepts important in determining the value of a bond?

We Answered:

Scenario- Buy a $1000 ten yr US treasury bond with a 5% interest rate.
You spend 1000 today, each year for ten years, you get 50, and and the end of 10 yrs you get 1000 back.
1st- There is value of time because you need an incentive not to spend 1000 today, compensation for postponing consumption. Also, you need compensation for other alternatives that you can undergo- auch as buying Google stock.
2nd- WIth inflation, the 1000 you get back in 10 years will not have the same purchasing power then as it does today. Remember how far 20 dollars went back in the day? how much can you buy with it tpday?

Myrtle Said:

10 yr treasury Bond Auction?

We Answered:

Generally, increased strength in the bond market makes interest rates go down.

    30 Year Treasury Bond Rate

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    Department Of Treasury Savings Bonds

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    Indexed Treasury Bonds

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    Inflation Indexed Treasury Bonds

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    Inflation Treasury Bond

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    Inflation Treasury Bonds

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    Long Term Treasury Bond

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    Ten Year Treasury Bond

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    Treasury 30 Year Bond

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    Treasury Bill Bond

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    Brett Said:where can I access historical 10 yr US Treasury bond data in tabular form for free on the internet?We Answered:This is the index for the 10 yr treasury. Select historical prices at the bottom of the page and download to a spreadsheet. The index value is an alternative form of the yield. Yesterdays close was 50.36 which corresponds to a yield of 5.036%Glenda Said:Where Can I find the Bid/Ask historical data for 3 Months T-Bills?We Answered:Oddly enough, the Treasury Department's Bureau of Public Debt (www.publicdebt .treas.gov) lets you set up an account to buy bonds directly over the Web, but...

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    Treasury Bond Interest Rate

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    Treasury Bond Price

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    Treasury Bond Prices

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    Treasury Bond Trading

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    Treasury Bond Value

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    Treasury Bond Yield Curve

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    Treasury Inflation Bonds

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    Treasury Inflation Indexed Bonds

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    Treasury I Bonds

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    Treasury Savings Bond

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