The big picture about bonds
A bond's coupon rate, often dangled as the carrot, should not be the only factor investors look at, says CAI HAOXIANG
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A FRIEND, upset at how his mother was sold a financial product, recently told me this story.
His mum was convinced by her banker to buy a complex product which involved the bonds of four foreign companies with coupons ranging from 3 to 5 per cent.
Now, 3 to 5 per cent sounds good. But if she knew how bonds worked, she would have asked what the yield of the bonds were.
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