Question: What are the different measures in the bond market to realize the return?
Answer: Investors or evaluators in the bond market use several different measures to calcualte the possible return from investing in a particular bond: - What is the current yield? - What is the yield-to-maturity? - What is the Yield-to-call for a callable bond? - What is the yield-to-put for a putable bond? - What is a yield-to-worst for bonds?
Question: What do you mean by yield-to-worst?
Answer: It represent the lowest yield for a particular bond.
Question: How does price is represented for a bond?
Answer: Always, price for a bond is represented at a percentage of par or face value. To convert the price quote into a dollar figure, one simply divides the price by 100 and then multiplies by the par value. Suppose bonds current price is 102.5, which has par value $10000. So to calculate the dollar value of the bond, you have to do ((102.5/100)*10000) = $10250 Hence, bond is being traded at 102.5, if you need to buy a one bond for this security which has the par value as $10000. Then to buy, you have to actually pay $10250. That’s one of the reason, you see bond actual yield vary and one of the contributing factor is its current price.
Question: What do you mean by call features on a bond?
Answer: If a bond has a call provision, it means the issuer retains the right to retire the debt (before the actual maturity date), and it can be fully or partially.