Rank: New-farer Joined: 5/22/2016 Posts: 69 Location: Nairobi
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maka wrote:Hobitke wrote:maka wrote:Hobitke wrote:maka wrote:Hobitke wrote:maka wrote:Angelica _ann wrote:Auction Method : Multi-Price Bid Auction......... what does this mean? In a multiple price auction, the successful bidders are required to pay for the allotted quantity at the respective price or yield at which they bid.If its within the cut off range... This bond business is difficult to grasp! If anyone can be as so kind as to explain how to arrive at the quoted yield? Is this the same as the coupon rate? ( newbie questions ) Two different things...quoted yield is the current market price of the bond at the secondary market...or if its at the auction its the price you put your bid at...Coupon rate is normally fixed never changes during the tenor of the bond thats what you will be getting every year usually semi annually... @ Maka , thanks, by price do you mean total value I am bidding? e.g 1 million? Would that not be face value? Yes but depending on your bid rate you can buy at premium,at par or a at a discount. ..so a paper that is 1 million...you might pay less for every 100 but coupon will still be calculated on your 1 million...and you will still get your 1 million at maturity. @ Maka, thanks , So ..if at auction they state ''Price per Kshs 100 at Average Yield '' that means its at par therefore yield would be zero?  Nope...at market weighted average yield...you will get the bond at the average yield of accepted bids fellows went in at...which can still be at discount,par or premium depending on the auction outcome...you should try with this IFB you will get to learn...expecting a discount on it... I just might in order to understand better, going with the next IFB @ 12.5% , to approximate payouts using the CBK calculator , what would the expected yield be? 
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