Making short term profit on Bonds - Aussie Stock Forums

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  1. #1

    Exclamation Making short term profit on Bonds

    Hi all,

    I have a question in relation to Treasury Traded Bonds traded from ASX.


    When I look at Yield, many with a high coupon interest bonds as well show a very low yield value. I believe this tells if you keep your money till maturity rate, your return of investment will be low since offer prices for each unit are trading well above $100 face value.

    The question that I have is that say you invested $10,000 for a traded value of $110 per unit for a $100 face value for coupon interest of 6%. You will get 90 units (10,000/110) which will pay a $540 (6x90) for year yielding 5.4% for $10,000 invested.

    Assuming I can sell it again for $110 a unit, I stand to make this profit rather than awaiting 10 years for which Yield to Maturity yield is 2.5% (where I will be paid $100 per unit instead of $110 per unit I traded for). Is that correct or am I missing something?

  2. #2

    Default Re: Making short term profit on Bonds

    i think the way to make short term money that is above its interest rate is if the national interest rate goes down and it now pays better (or even better then it already was) then what is available to everyone else.

    Basically you are gambling on the interest rates if playing the short term.

    correct me if i am wrong anyone, also sorry im not using the correct terms.

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