Get Rich, How Treasury bonds can put you among the Rich

You are in the world of the wise which qualifies you as a wise person, in my article How to get rich: the bonds secret exposed, I clearly showed how a person can get rich using very little investments into bonds. If you haven’t read that article yet,

I request you read it first so that you are not left behind in this article. When you are acquiring a bond, the capital you use is always low yet the yields are always high. In this article, I am going to explain some of the common words used when dealing with treasury bills and bonds which will probably help you get more value from your investments.

I really want you to make a wise move before you real acquire a bond; you are supposed to read through the terms of that particular bond before you go for it. The central bank publicizes a prospectus which can be obtained from the primary dealers or the bank it’s self. Below are some of the terminologies you will have to encounter as a person who deals in bonds and treasury bills which you should be conversant with to make better investment decisions.

Ask Price
This is the price at which an investor is willing to sell a treasury bond

Bid
A commitment by an investor to the central bank regarding the amount, price and tenor bond

Competitive Bid
A commitment to buy Treasury bonds with a face value in excess of the value set by the central bank at a state price

Non Competitive Bid
To commitment to buy Treasury bonds with a face value at the average price of the successful competitive bids

Central Depository System
Computerized register at the central bank that maintains accounts for holders of government securities

CDS Id
An identification number that is issued to a person or organization when registering on the CDS

Cds Instrument Account
An account in the name of the holder of government securities for recording investments on the CDS

Coupon Interest
Interest paid at a fixed rate on the face value every six months


Discount
Additional interest income that is earned over the life of a bond when the bond is bought at a price lower than the face value

Face Value
The value of a bond on maturity date

Premium
Interest expenses paid by the investor when they purchase a bond at a price in excess of the par or face value

Maturity Value
The value of a bond on maturity date

Yield to Maturity
It is the discount rate which causes the future cash flows from the semi-annual coupon interest payments and the maturity value to equal the price of the bond today. The yield to maturity assumes that the semi-annual coupon interest payments will be reinvested at the same yield to maturity.

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