Word: bondses
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Cabot said the company maintains the equal ratio, and has shifted most of the bond investments into short-term notes, meaning that the roughly $1.3 billion of the endowment in bonds can be moved around more quickly.
Most zeros are virtually risk free because they are backed by U.S. Treasury notes. A broker creates zero bonds by first purchasing large blocks of the Government securities and then offering customers shares in the form of zeros. Consumers can generally invest for as little as $1,000; maturities of...
Although holders of zeros receive no cash until their bonds mature, they must still pay annual taxes as the principal and interest grow. Result: tax-exempt investors like pension funds have been the main buyers of the bonds. But consumers are also snapping them up for Individual Retirement Accounts, which...
The certificates do have some disadvantages. They provide buyers with no annual income. Moreover, like all other long-term bonds, zeros expose owners to the chance that interest rates may rise before the investments mature. Holders needing to sell early could thus find that their zero bonds were worth less...
Still, brokers see a profitable future for zeros. Wall Street expects sales of about $45 billion during the next year and a half. Wilson, meanwhile, says he is developing eight new ways to invest in the bonds. That could help make zero an even hotter number than it already is...