Finance: What is a story bond?

What is a story bond? Well, snuggle up...we'll tell you a story all about it.

College and CareerPersonal Finance
CoursesFinance Concepts
FinanceFinance Definitions
Financial Responsibility
Personal Finance
Finance and EconomicsTerms and Concepts
LanguageEnglish Language
Life SkillsFinance Definitions
Personal Finance
SubjectsFinance and Economics
Terms and ConceptsBanking
Bonds

Transcript

00:21

been cutting her hair for decades and selling it on

00:24

c baii you know for the down payment But then

00:27

one day a socialist ogre came by and took all

00:30

of her money her belongings and her pink unicorn and

00:33

gave it all to the union elves So then the

00:36

troll family who had loaned her the castle loans grew

00:39

very nervous about her collecting the debts she owed them

00:43

Especially now that the socialist ogre had taken over her

00:46

castle and was kind of ruining it with the elves

00:49

partying down way too hard Well the troll family bonds

00:53

were backed by the value of the castle And the

00:55

family knew that even if the castle were completely ruined

00:59

by the trolls and the ogre and it turned to

01:02

rubble while the lands around it were worth five times

01:05

the bonds principle so is the bonds trading value had

01:09

come down from its thousand dollars a unit par value

01:13

to being offered it now only six hundred bucks investors

01:16

who realised the great value of the pink unicorn breeding

01:20

grounds around the castle wanted toe by that bond aggressively

01:24

at these prices Well the brokers who wanted to sell

01:27

the bond and make their nice commissions were only too

01:29

happy to tell and retail this complex story And in

01:33

fact this is the chances of a story bond that

01:36

is There is some explanation as to why the bond

01:40

is trading at some weird meaningful discount or premium toe

01:44

where it was originally offered or trading that is not

01:47

explainable by normal market conditions like fed fund rates changing

01:51

or inflation moving around or other broad based global debt

01:55

phenomena that would raise or lower the tides bringing up

01:58

or down all votes This is a story bond It

02:01

has its own unique story that has to be told

02:03

and retold like the bible again and again it's a

02:06

bond that has such a complicated random bizarre history behind

02:10

it that investors need tohave an endlessly long painful story

02:14

like this one told to them before they feel comfortable

02:17

Enough to risk their money on that bond And still

02:20

you know be able to sleep at night because well 00:02:22.805 --> [endTime] you know who doesn't love a good bedtime story