Semi-Annual Bond Basis - SABB
Categories: Bonds
Semi-annual...like how often you go to the dentist, if you’re good. Or how often you wash your sheets, if you’re bad.
It’s also a common way to look at bond yields. Since different bonds operate on different schedules (monthly, quarterly, etc.), it can be difficult to compare the value of bonds across the board. Investors need a standard measure...a common measure they can use to evaluate the various options in the market.
The SABB puts all these differing bonds on the same footing. It calculates the bonds as if they all operate on a semi-annual basis (twice a year).
Imagine you're a baseball scout trying to choose between two minor league players you might want to call up to the big-league squad. One hit 10 home runs in 60 games; another hit 14 home runs in 80 games. It's hard to compare them on raw numbers, since they didn't play comparable seasons. But if you transfer the numbers to a full-season basis (figure out the run rate for a 162-game season), you can compare them on the same level.
Same deal with bonds. By taking all the bonds and putting them in a semi-annual context, potential buyers can more easily compare investment opportunities.
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Finance: What is Tax Basis?8 Views
Finance allah shmoop What is tax basis Well your basis
is your cost Your costs for assessing how much you
owe when the tax man coming you bought a thousand
shares of whatever dot com at twelve bucks a share
in its eye po and huzzah Three years later the
stock is at thirty You decide whatever dot com is
now passe because a kardashians said so it'll be over
taken by whenever dot com and you want to sell
So you dio and you live in a thirty percent
marginal tax blue state And that is your federal tax
rates in twenty percent But then you add in ten
percent for state taxes and whatever's left for obamacare and
you pay about thirty percent tax on your gains Well
you paid twelve grand to buy the stock and after
the sale you took in thirty grand when you sold
it for a gain of eighteen thousand dollars Your tax
basis on those shares is twelve grand so you pay
thirty percent tax on the eighteen grand of gain or
fifty four hundred dollars to net from the sale of
thirty thousand dollars worth of stock How much Yeah twenty
Four thousand six hundred dollars He fancy math Had you
just gotten those shares free I'ii they were gifted to
you and you had no tax basis or a tax
basis of zero dollars a share Well then your gain
would have been from zero to thirty grand or a
gain of thirty thousand dollars to then be taxed at
thirty percent or nine grand in taxes to net just
twenty one thousand dollars after the sale So having ah
high tax basis or at least being able teo point
toe one saves you money when the tax man coming
and well that's pretty much it alright he's gone Now
you can all come out Come on it's Okay it's 00:01:53.698 --> [endTime] safe