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Finance allah shmoop What is a story bond Well once

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upon a time there was a castle alone in the

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kingdom of yield The princess wanted to pay on ly

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five percent a year to rent that money She had

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found just the right castle she wanted to buy She'd

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been cutting her hair for decades and selling it on

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c baii you know for the down payment But then

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one day a socialist ogre came by and took all

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of her money her belongings and her pink unicorn and

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gave it all to the union elves So then the

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troll family who had loaned her the castle loans grew

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very nervous about her collecting the debts she owed them

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Especially now that the socialist ogre had taken over her

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castle and was kind of ruining it with the elves

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partying down way too hard Well the troll family bonds

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were backed by the value of the castle And the

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family knew that even if the castle were completely ruined

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by the trolls and the ogre and it turned to

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rubble while the lands around it were worth five times

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the bonds principle so is the bonds trading value had

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come down from its thousand dollars a unit par value

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to being offered it now only six hundred bucks investors

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who realised the great value of the pink unicorn breeding

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grounds around the castle wanted toe by that bond aggressively

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at these prices Well the brokers who wanted to sell

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the bond and make their nice commissions were only too

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happy to tell and retail this complex story And in

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fact this is the chances of a story bond that

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is There is some explanation as to why the bond

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is trading at some weird meaningful discount or premium toe

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where it was originally offered or trading that is not

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explainable by normal market conditions like fed fund rates changing

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or inflation moving around or other broad based global debt

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phenomena that would raise or lower the tides bringing up

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or down all votes This is a story bond It

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has its own unique story that has to be told

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

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bond that has such a complicated random bizarre history behind

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it that investors need tohave an endlessly long painful story

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like this one told to them before they feel comfortable

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Enough to risk their money on that bond And still

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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

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