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Curious case of leveraging Astrea IV bonds.
By Growing your tree of prosperity  •  February 19, 2019
Sometimes I make mistakes when I teach a class. Fortunately, the smart folks who attend the session call me out very quickly and I can adjust my position rapidly on the spot.

In this case, I made a glaring mistake projecting the yield of Astrea IV bonds, taking the coupons and dividing it by market price to get more than 4% yields. One of my students is a brilliant CFA III candidate and he pointed out my mistake immediately after punching numbers into his Texas BA II calculator.

I have overestimated the yield to maturity of the bond.

The tragedy is that Astrea IV is that it has a provision that allows it to be called or cancelled in June 2023. This means that in June 2023, I will get back to $1000 of my money and 6 months worth of coupon payments even though the market price right now is a $1,080

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By Growing your tree of prosperity
I have recently completed my Juris Doctor and I am waiting to be called by the Singapore Bar. For the past 15 years I was an IT manager and I have worked in multinationals, financial exchanges, trade unions and even a government agency. I started my career as an AS/400 administrator and moved on to manage IT projects and operations
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