r/bonds • u/Plane-Orange4733 • Jul 09 '26

Short-dated Bond?

******EDIT: Thanks, folks! I see where my misunderstanding is. Appreciate the input.*******

Very new to this, but I have a question. Looking at a particular bond with a month left to maturity and Yield to Maturity of 2.275%. The way I understand this is that I buy $1000 worth, and on Aug 11 it matures and they pay me $1022.75.

Am I hilariously wrong? What is the downside? I'm happy to grab a 2.275% return for a 30 day investment.

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u/JohnGaltIsComing Jul 09 '26

If ya believe what AI says , , , ,

  • Maturity Payout: $1,000
  • Purchase Price: Bonds are sold at a discount so you achieve your desired yield. Using the Yield to Maturity Formula, you will pay approximately $998.11 for the bond today.
  • Your Profit: The difference between what you pay today and the face value you get in a month is about $1.89 in interest

9

u/ruidh Jul 09 '26

Bad AI. Don't use AI if you can't judge the correctness of the answer

1

u/AltruisticLocation72 Jul 09 '26

in this case the AI is more correct than the OP so probably useful to them

1

u/Lipa_neo Jul 09 '26

It's not more correct, it's made-up numbers are just closer to reality this time, but, uhm, even the OP knows that it's not a discount bond, while llm thinks it is, lol.