Bond Portfolio Analysis Reveals $165 Million Investment in 20-Year, 11% Coupon Bonds
A portfolio consisting of 150,000 bonds, each carrying an 11 percent coupon rate and currently priced at 108, represents a substantial $165 million investment, according to a recent analysis. The bonds have a remaining term of 20 years. this portfolio’s performance is closely watched by investors seeking fixed-income returns and provides a benchmark for evaluating similar bond investments in the current market.
Understanding the characteristics of this bond portfolio – its size, coupon rate, price, and maturity – is crucial for assessing its potential yield, risk profile, and sensitivity to interest rate fluctuations. The current price of 108 indicates the bonds are trading at a premium, meaning investors are paying more than the face value for the future income stream. this analysis is relevant to individual investors, institutional fund managers, and anyone tracking the fixed-income landscape.
The total face value of the bonds is calculated by multiplying the number of bonds by the assumed face value of $1,000 per bond, resulting in $150,000,000. The current market value is determined by multiplying the number of bonds by the current price: 150,000 bonds * 108 = $16,200,000. Adding this premium to the face value yields a total portfolio value of $165,000,000.
The annual coupon payment per bond is 11 percent of $1,000, or $110. Across the entire portfolio, this translates to an annual income of 150,000 bonds * $110/bond = $16,500,000.The current yield, calculated by dividing the annual coupon payment by the current market price, is approximately 10.18 percent ($16,500,000 / $162,000,000).
