is dividend adjusted into the price of a bond or not ?
Posted: Wed Jan 23, 2019 10:03 pm
I am still very uncertain about how to calculate returns of potential portfolio's. Last year I had my bonds in an etf and I could calculate return by just looking what my broker showed me on actual delivered prices and dividends. But now I consider switching to real LT german bonds I have to use data from historic charts to calculate returns:
2017 / 2048
https://www.deutsche-finanzagentur.de/d ... 001102432/
coupon=1.25%
The close prices:
2017-12-29: 99.96
2018-12-28: 110.08
return 2018: (109.95-100.1)/100.1 = 9.8%
2014 / 2046
https://www.deutsche-finanzagentur.de/d ... 001102341/
coupon=2.5%
Close prices:
2017-12-29:131.55
2018-12-28: 141.06
return 2018: (141.06-131.55)/131.55 =7.2%
My uncertainty is: Is the dividend already calculated into these prices or not ? I think they are not, why ?
2017 / 2048
https://www.deutsche-finanzagentur.de/d ... 001102432/
coupon=1.25%
The close prices:
2017-12-29: 99.96
2018-12-28: 110.08
return 2018: (109.95-100.1)/100.1 = 9.8%
2014 / 2046
https://www.deutsche-finanzagentur.de/d ... 001102341/
coupon=2.5%
Close prices:
2017-12-29:131.55
2018-12-28: 141.06
return 2018: (141.06-131.55)/131.55 =7.2%
My uncertainty is: Is the dividend already calculated into these prices or not ? I think they are not, why ?
- If I add the coupon rate to the return both bonds get a return which are (more) similar, which is what I would expect:
9.8%+1.25%=11.05%
7.2%+2.5%=9.7%
- I learned from my etf fund that dividend was not adjusted into the prices on the chart