Investment Terms and Concepts

Yield To Maturity (YMT) – South Florida Fixed Income Breach of Fiduciary Duty, Negligent Supervision and Fraud FINRA Arbitration and Litigation Attorney

Published on: July 13, 2013 | By Russell L. Forkey, P.A.

Yield to Maturity (YTM) – South Florida Breach of Fiduciary Duty, Negligent Supervision and Breach of Contract Litigation and FINRA Arbitration Attorney, Russell L. Forkey, Esq.

“Yield to Maturity” is a concept used to determine the rate of return an investor will receive if a long-term, interest-bearing investment, such as a bond is held to it maturity date. It takes into account the purchase price, redemption value, time to maturity, coupon yield, and the time between interest payments. Recognizing time value of money, it is the discount rate at which the present value of all future payments would equal the present price of the bond, also known as the internal rate of return. It is implicitly assumed that coupons are reinvested at the yield to maturity date.

Please keep in mind that the above referenced post is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning the contents of this post, you should contact a qualified professional.

Negotiable Instrument – Florida Uniform Commercial Code Litigation and AAA Arbitration Attorney

Published on: July 11, 2013 | By Russell L. Forkey, P.A.

Negotiable Instrument – South Florida Uniform Commercial Code Litigation and AAA Arbitration Attorney, Russell L. Forkey, Esq.

Each state has adopted its own variation of the Uniform Commercial Code. Florida is no exception. Florida Statute, Section 673.1041 defines a negotiable instrument to an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(a) Is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

Risks of High Yield Corporate Bonds – South Florida High Yield Corporate Bond Fraud, Misrepresentation and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney

Published on: July 3, 2013 | By Russell L. Forkey, P.A.

Risks Associated With High-Yield Corporate Bonds. Florida High Yield Corporate Bond Fraud, Misrepresentation and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney.

Some investors with a greater risk tolerance may find high-yield corporate bonds attractive, particularly in low interest rate environments. If you are considering buying a high-yield bond, it is important that you understand the risks involved.

Default Risk. Also referred to as credit risk, this is the risk that a company will fail to make timely interest or principal payments and default on its bond. Defaults also can occur if the company fails to meet certain terms of its debt agreement. Because high-yield bonds are typically issued by companies with higher risks of default, this risk is particularly important to consider when investing in high-yield bonds.

High Yield Corporate Bond – Florida High Yield and Fixed Income Fraud, Misrepresentation and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney

Published on: July 3, 2013 | By Russell L. Forkey, P.A.

High Yield Corporate Bonds – Florida High Yield Corporate Bond and Fixed Income Breach of Fiduciary Duty, Negligent Supervision and Breach of Contract FINRA Arbitration and Litigation Attorney:

A high-yield corporate bond is a type of corporate bond that offers a higher rate of interest because of its higher risk of default. When companies with a greater estimated default risk issue bonds, they may be unable to obtain an investment-grade bond credit rating. As a result, they typically issue bonds with higher interest rates in order to entice investors and compensate them for this higher risk. High-yield bond issuers may be companies characterized as highly leveraged or those experiencing financial difficulties. Smaller or emerging companies may also have to issue high-yield bonds to offset unproven operating histories or because their financial plans may be considered speculative or risky.

Please keep in mind that the above information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If you have any questions concerning the contents of this post, the reader should contact a qualified professional.

Risks Associated With Corporate and Municipal Bonds – Florida Corporate and Municipal Bond FINRA Arbitration and Litigation Attorney – Investors May Be Able to Recover Their Investment Losses

Published on: July 1, 2013 | By Russell L. Forkey, P.A.

South Florida Corporate and Municipal Bond FINRA Arbitration and Litigation Attorney. Various Risks Associated With Corporate Bond:

There are a number of risks associated with corporate bonds. The following list is not designed to be complete. However, this post does describe many of the more well known. Please keep in mind that this post is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning the following, you should consult a qualified professional.

Credit or Default Risk: Credit or default risk is the risk that a company will fail to timely make interest or principal payments and thus default on its bonds. Credit ratings try to estimate the relative credit risk of a bond based on the company’s ability to pay. Credit rating agencies periodically review their bond ratings and may revise them if conditions or expectations change.

The Relationship Between Corporate and Municipal Bond Prices, Interest Rates and Yield – South Florida FINRA Arbitration and Litigation Attorney

Published on: July 1, 2013 | By Russell L. Forkey, P.A.

The Relationship Between Corporate and Municipal Bond Prices, Interest Rates and Yield. South Florida FINRA Arbitration and Litigation Attorney.

The price of a bond moves in the opposite direction than market interest rates. When interest rates go up, the price of the bond goes down. When interest rates go down, the bond’s price goes up. A bond’s yield also moves inversely with the bond’s price. For example, let’s say a bond offers 3% interest, and a year later market interest rates fall to 2%. The bond will still pay 3% interest, making it more valuable than newly issued bonds paying just 2% interest. If you sell the 3% bond, you will probably find that its price is higher than a year ago. Along with the rise in price, however, the yield to maturity for any new buyer of the bond will go down. Now suppose market interest rates rise from 3% to 4%. If you sell the 3% bond, it will be competing with new bonds that offer 4% interest. The price of the 3% bond may be more likely to fall. The yield to maturity for any new buyer, however, will rise as the price falls.

It’s important to keep in mind that despite swings in trading price with a bond investment, if you hold the bond until maturity, the bond will continue to pay the stated rate of interest as well as its face value upon maturity, subject to default risk.

Corporate Bonds – Price, Face Value, Maturity, Coupon Rate and Yield to Maturity – South Florida Business and Corporate Litigation Attorney

Published on: July 1, 2013 | By Russell L. Forkey, P.A.

Key Words and Phrases Associated with Corporate Bonds:

The basic financial terms of a corporate bond include its price, face value (also called par value), maturity, coupon rate, and yield to maturity. Yield to maturity is a widely used measure to compare bonds. This is the annual return on the bond if held to maturity taking into account when you bought the bond and what you paid for it.

A bond often trades at a premium or discount to its face value. This can happen when market interest rates rise or fall relative to the bond’s coupon rate. If the coupon rate is higher than market interest rates, for example, then the bond will likely trade at a premium.

Secured vs. Unsecured Corporate and Municipal Bonds – South Florida FINRA Arbitration and Litigation Attorney – You May Be Able To Recover Your Investment Losses

Published on: June 30, 2013 | By Russell L. Forkey, P.A.

Secured vs. Unsecured Corporate and Municipal Bonds – What happens if a company goes into bankruptcy? South Florida FINRA Arbitration and Litigation Attorney – You may be able to recover your investment losses.

If a company defaults on its bonds and goes bankrupt, bondholders will have a claim on the company’s assets and cash flows. The bond’s terms determine the bond-holder’s place in line, or the priority of the claim. Priority will be based on whether the bond is, for example, a secured bond, a senior unsecured bond or a junior unsecured (or subordinated) bond. In the case of a secured bond, the company pledges specific collateral-such as property, equipment, or other assets that the company owns-as security for the bond. If the company defaults, holders of secured bonds will have a legal right to foreclose on the collateral to satisfy their claims. Bonds that have no collateral pledged to them are unsecured and may be called debentures. Debentures have a general claim on the company’s assets and cash flows. They may be classified as either senior or junior (subordinated) debentures. If the company defaults, holders of senior debentures will have a higher priority claim on the company’s assets and cash flows than holders of junior debentures. Bondholders, however, are usually not the company’s only creditors. The company may also owe money to banks, suppliers, customers, pensioners, and others, some of whom may have equal or higher claims than certain bond holders. Sorting through the competing claims of creditors is a complex process that unfolds in bankruptcy court.

However, investors usually purchase and sell corporate and municipal bonds through securities broker/dealers. Under certain circumstances, investments losses suffered by investors, in these types of bonds, may be recoverable from the brokerage firm. Therefore, it is important for the reader to consult with a qualified professional.

Basic Characteristics of Corporate and Municipal Bonds – Florida FINRA Arbitration and Litigation Attorney – Investment Losses

Published on: June 30, 2013 | By Russell L. Forkey, P.A.

Basic characteristics of corporate and municipal bonds – South Florida FINRA Arbitration and Litigation Attorney – As an investor, you may be able to recover losses associated with your investment in corporate bonds.

Corporate bonds make up one of the largest components of the U.S. bond market, which is considered the largest securities market in the world. Other components include U.S. treasury bonds, other U.S. government bonds, and municipal bonds. Companies use the proceeds from bond sales for a wide variety of purposes, including buying new equipment, investing in research and development, buying back their own stock, paying shareholder dividends, refinancing debt, and financing mergers and acquisitions.

Bonds can be classified according to their maturity, which is the date when the company has to pay back the principal to investors. Maturities can be short term (less than three years), medium term (four to 10 years), or long term (more than 10 years). Longer-term bonds usually offer higher interest rates, but may entail additional risks.

Corporate Bonds – South Florida FINRA Arbitration and Litigation Attorney – Corporate Bond Losses

Published on: June 30, 2013 | By Russell L. Forkey, P.A.

Florida Corporate Bond Litigation and FINRA Arbitration Attorney:

As an Investor, you may be able to recover your losses relating to investments in corporate bonds but first it is important to understand what a corporate bond is. This is especially true in an economic environment of rising interest rates.

A bond is a debt obligation, like an Iou. Investors who buy corporate bonds are lending money to the company issuing the bond. In return, the company makes a legal commitment to pay interest on the principal and, in most cases, to return the principal when the bond comes due, or matures. To understand bonds, it is helpful to compare them with stocks. When you buy a share of common stock, you own equity in the company and will receive any dividends declared and paid by the company. When you buy a corporate bond, you do not own equity in the company. You will receive only the interest and principal on the bond, no matter how profitable the company becomes or how high its stock price climbs. But if the company runs into financial difficulties, it still has a legal obligation to make timely payments of interest and principal. The company has no similar obligation to pay dividends to shareholders. In a bankruptcy, bond investors have priority over shareholders in claims on the company’s assets. Like all investments, bonds carry risks. One key risk to a bondholder is that the company may fail to make timely payments of interest or principal. If that happens, the company will default on its bonds. This “default risk” makes the creditworthiness of the company – that is, its ability to pay its debt obligations on time – an important concern to bondholders.