Municipal Bond Forum
‘Ask this very important question’
Q
Do the worst case yields cited by your firm account for an adjustment of principal in the return? In a recent Wall Street Journal article, the columnist advised bond buyers to ask this very important question.
A
James A. Klotz responds:
Yes. The worst case yield on your confirmation is just that – the lowest net yield you can receive on that investment. It includes what the author calls “return of principal.”
Though the Wall Street Journal article you cite was well intentioned, there were several points that were confusing. Our new column, “Just How Smart is the ‘Intelligent Investor’? ” addresses those issues.
Start here.
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The responses provided in this forum are meant to address specific questions posed by investors about their municipal bonds and to provide market insight for our general audience. Please note, your investments, objectives, results and experience may differ significantly. Our answers and any potential strategies discussed should not be construed as a solicitation to buy nor sell any security or investment product. All investing entails risk.