What is a Rate Trigger?
How Does a Rate Trigger Work?
Now let's assume that three years go by and interest rates have fallen considerably. Company XYZ talks to investment bank ABC and learns that it could bonds at just 5%. This would save it millions in interest expense.
Accordingly, the 5% acts as a rate trigger, and Company XYZ decides to borrow the money back, but they lose out on seven more years of 10% payments.and use it to pay off the 10% bonds seven years early. The people who owned the 10% bonds get their
Why Does a Rate Trigger Matter?
Rate triggers prompt change. They have major effects for investors who hold, because their has an incentive to the securities in order to save .
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
The dumbest investing mistake I ever made was opening a Roth IRA account. It seems like a smart decision, right? Set up an account that...Read More →
My clients didn't believe me when I said they could make an extra $10,000 a year, right away. "Kate, we don't want to work harder. We're close to...Read More →
Question: "I've heard a lot of reminders since the beginning of the year to check up on my 401(k) and other retirement plans and rebalance them if they're not diversified...Read More →
You've maxed out on contributions to your traditional IRA, so there's nothing left for you to do, right? Wrong. You can make previous...Read More →