THE STEADY STAPLES OF A WELL-BALANCED PORTFOLIO
traded. The row of numbers immediately following the symbol signi- fies what the coupon rate is, as well as when the bond matures. So for this example, the coupon is 8.5 percent, and the bond matures some- time in the year 2005. This information is vital because it helps investors distinguish between the different bonds. This company may have issued several different bonds. Thus, for investors to identify properly which bond they hold, the yield and year of maturity is needed. The second set of numbers, in this case 7.8, provides the bond’s current yield. This is found by dividing the bond’s annual interest amount by its current price (8.5 ÷ 108). The “Vol.” column specifies how many bonds were traded on that day. Here, we see that 30 bonds were traded. The last two columns contain price informa- tion. Note that there is a difference between the bond quotes and stock quotes. Instead of showing a high, low, and closing price for the bonds (as is done with stocks), there is just a closing price and the change in price from the previous trading day. Bond prices are quoted as a percent of par value. Par value is $1000. Therefore, in the ABC quote, we see that the closing price for the bond was 108 per- cent of par, or $1080 (108% 1000).
For the next example, we have a convertible bond. Convertibles are listed along with the rest of corporate bonds and zeros. They are easily identified because they are listed along with the letters “cv” under the “current yield” column. All the rest of the information about the bond is identical to the ABC corporate bond. The final example is for a zero-coupon bond from the XYZ corporation. Instead of listing a coupon rate along with the maturity year, there are the letters “zr,” indicating that the bond is a zero-coupon. In this case,