can someone plz explain dated date and issue date on bond ???

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    Topic
  • #816354
    vodrldnr
    Participant

    how are they different ? and how are they understood when solving bond problems if issue date and dated date are different? ?????

    It ain't About How Hard You Hit
Viewing 5 replies - 1 through 5 (of 5 total)
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  • #816372
    Lou
    Participant

    Issue date is essentially when you issue the BP, dated date is when the bond was first created (in a nut shell)

    The real key to know here is that you record the cash received with accrued interest if the issue date is past the dated date. I.e if the bond is dated 1/1 and issued 2/1 the cash received would include the accrued interest from the 1 month

    AUD - 91
    BEC - 91
    FAR - 94
    REG - 87
    Done!

    FAR- taken 8/11/16....now the wait begins
    AUD- scheduled 9/8/16
    BEC- scheduled 10/9/16
    REG-scheduled 12/10/16

    Live a few years like most people won't, to live the rest of your life like most people can't.

    #818478
    vodrldnr
    Participant

    with your kind explanation, now I am getting it like ..

    the dated date is where I start to count my interest. am I right ???

    lets say I buy a bond on 9/1 and the bond is issued on 6/1 and dated date is 1/1.

    then I expect I am entitled to interest revenue

    And the interest revenue has been incurring from the dated date 1/1 ( accrued interest may arise when I buy the bond on 9/1 )

    am i understanding right?

    It ain't About How Hard You Hit
    #819072
    CPAKING
    Participant

    The key to understand is that if you buy a bond in-between the issue date and the interest payment date (when payments are due) you end up paying for

    1) The bond at the market rate which ends up being at a discount or premium

    AND

    2) paying for the interest that has accrued between the periods.

    You are paying in advance for the interest that you will get right back from the issuer in a few months on the interest payable dates.

    **Remember that the issuer is ALWAYS going to pay you the same amount of interest based on the face amount and rate that was printed on the bond when it was created**

    The issuer is not going to stop and calculate partial interest payable to the millions of bond holders that purchased bonds in-between…

    So when you buy the bond in-between dates, you pay HIM upfront for that fractional interest period thats accrued..and you get it right back on the scheduled interest pay dates when the issuer pays the “automatic”, “always the same” quarterly, annually, or semi annually interest payments.

    Hope this helps..

    I think of creation date as the day the bond coupon was printed (dated date). Printed (dated) date will always be the same..cant change it because its printed in black and white.

    Issue date is the day the the bond was sold and the interest rate that is tied to the issue date is the prevailing market rate..what the bond “yields”

    Does this help?

    FAR - 8/24/2016
    BEC -
    REG -
    AUD -

    #819534
    vodrldnr
    Participant

    The issuer is not going to stop and calculate partial interest payable to the millions of bond holders that purchased bonds in-between…

    => this explanation is a kick.

    now it totally makes sense why they do like that when dated date and issued date is different.

    thank you soooooooooooooooo much

    It ain't About How Hard You Hit
    #819540
    vodrldnr
    Participant

    again, CAKING's answer is really helpful.

    5STAR!

    It ain't About How Hard You Hit
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