Bonds are fairly new to me,pls englighten me regarding queries below.
Are t bills n government bonds available every week to invest in or it comes for investment infrequently as per rbi notice?
2.you get interest as per coupon rate on face value,right?if yes,then follow up question is that price at which we purchase it will effect annual interest rate ytm?,pls explain that with an example.
Assuming bond face value is 1000 coupon 7 purchase price 1010
And also please do not point to calculators, or bond formula as mentioned on various websites.
Need to understand what component is making yield variable.
You can refer to the insightful Government Securities Module on varsity to understand the basics of the T bills and bonds. All your questions are answered there.
Do check Zerodha Coin site, if you are willing to invest.
@Sanjukumar.K i did give it a read,but unfortunately how ytm varies with time n calculated is not explained it
@AJ007 yes,it eats up the yield but can we calculate how much its gonna eat up.
Also like in fd you know u get Simple Interest but if it is for than a year n u get maturity amount at end you get compounding effect.
Similarly in bonds if we invest 1 time ,is there any sorts of compounding effect coming to play…cuz all what i have learned for varsity is that you get half yearly interest on face value.
Am i missing something?
Yes. You can calculate. You will need to list down all the interest payouts that u r expecting to get in the future in an excel sheet along with the date along with the initial investments and final payout. Then you can put the Xirr formula. Check the attached screenshot where I am calculating yield of a 8.2% coupon rate bond…