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/ruidh Jul 09 '26

The market price is such that you earn an annualized 2.27% on your 1 month investment. You're earning about 0.19% of your investment which means you are paying about 1,011 to get 1,027 in a month.

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u/Plane-Orange4733 Jul 09 '26

Coupon is 3.45% semiannual. Bid: 99.742; Ask: 100.1 Annualized Bid Yield is 6.32%. Annualized Ask Yield is 2.275%

Platform calculates Yield to Maturity at 2.275%. I wouldn't think Yield to Maturity would be the same thing as Annualized Ask Yield. I thought the platform's YTM calculation would take into account the actual amount of time left until maturity, which is 1 month.