They pretty much share the same interest rate. That's right. I calculated the effective compounded interest rate of war bonds sold during WWII to be 2.91% for a ten year instrument while current ten-year notes are trading at 2.98%. So, current market forces have pushed interest rates on government bonds so low that they're, well, downright patriotic allowing the government to borrow money so cheaply.
It makes me think of this WWII-era commercial for war bonds:
By the way, calculation was based on the following information. You could buy a bond that matured in ten years at $25 for $18.75. So, the calculation is ((25/18.75)^(1/10)) which is the good old fashioned compounded annual growth rate formula for those who are interested in such things.Any source
No comments:
Post a Comment