Accrued Market Discount
The bonds in the oil well driller looked just fine when they were issued by the company right around par value of $1,000 with a 6% coupon. But that earthquake and tsunami didn't mesh well with the angry sperm whale invasion, and when the platform came loose, bad things happened to the bonds. They cratered to $600 and sat there. It was then that you bought them.
The flavor of bond you purchased comes due in six years, and it carries what's called an accrued market discount. Each year, that bond will come closer to owing its full principal, and you as the holder may have to pay the gain as that market discount comes closer to par value. Note that, if the bonds are truly in danger of not paying, then you don't pay tax, and the bond likely sits in the doldrums at some very low price. That delta between what you paid for the bond and its expected eventual principal return value of $1,000 par is the accrued market discount.
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Finance: What is pooling: investment/int...3 Views
Finance allah shmoop what is pooling Well it's aggregating no
no aggregating yeah Throwing in cash together partnering pooling interests
in an investment simply refers to two or more players
getting together to invest their money in whatever form mutual
funds are are pooled investment So our index funds hedge
fund bond funds etfs reads mlps any uh pretty much
and well every other investment vehicle that can scale to
allow for two or twenty or two million investors to
all come together and invest well Why would people want
to do this scale or rather synergies of costs from
scale Whether you have one investor or ten thousand you
need to file papers and there are usually pretty much
always lawyers involved and accountants and other wall street gum
sucking gadflies and the marginal additional cost of servicing ten
thousand pooled investors is only somewhat more than servicing won
So in many cases pooling makes a lot of sense
when investors interests are generally aligned and when they're not 00:01:07.229 --> [endTime] around there's trouble
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