Comments on: The Debt funds (Part 3)

By: Karthik Rangappa

Karthik Rangappa — Mon, 16 Dec 2024 06:10:21 +0000

In reply to Anshul Mishrra. Both represent borrowing obligation. CP = tenure is 1 year and bonds can be more than year.

By: Anshul Mishrra

Anshul Mishrra — Mon, 16 Dec 2024 00:31:53 +0000

Hey Karthik,
Can you pls help me understand the difference between CP and bond?? (Don’t they mean the same)

By: Karthik Rangappa

Karthik Rangappa — Fri, 29 Nov 2024 03:19:19 +0000

In reply to Ashwin Porwal. Sorry, I'm unable to understand this. Can you please give more context?

By: Ashwin Porwal

Ashwin Porwal — Thu, 28 Nov 2024 09:02:00 +0000

Hello Sir,
I don’t know it’s me understanding it wrong or it is a mistake. In 13.1 in Modified Duration’s second point it is written (A 1.5% decrease in bond price, increases the bond’s price by 4.8%). So, isn’t there decrease in interest rate will come in the first sentence..?

By: Karthik Rangappa

Karthik Rangappa — Thu, 03 Oct 2024 02:19:34 +0000

In reply to Rookie investor.

Thanks for the kind words, means a lot 🙂

No yield calculation does not factor inflation. Thats a separate math that you will have to do. As far as the resources, can you tell me what exactly you are looking for beyond whats here in Varsity. It will help me point you to a worthy resource and also help me understand what else we could cover to make our content comprehensive.

By: Rookie investor

Rookie investor — Wed, 02 Oct 2024 16:31:02 +0000

Hey Karthik!. First of all i have to say you are AWESOME!. You make everything easier for people like me who are just starting to enter this new world. You are indeed a great teacher. I have a simple question. Does the yield calculated take into account inflation i mean wouldn’t inflation affect the purchasing power of my returns ? Also one more thing could you give us some resources that everyone here can use to dig deeper into mutual funds and stocks and stuff. There are a lot of junk out there so i would love if you could point to us out some great reads/books you learned a lot from (like gradually from beginner to more advanced level) if you don’t mind.

By: Karthik Rangappa

Karthik Rangappa — Sat, 03 Aug 2024 03:50:35 +0000

In reply to Aman. Basically money market fund managers invest in short term bonds, which is basically CPs and T-bills.

By: Aman

Aman — Fri, 02 Aug 2024 07:51:17 +0000

It is mentioned that money market instruments are CP, CD and T bill. But why does it say that money market fund managers can only invest in CP and CD.

By: Karthik Rangappa

Karthik Rangappa — Mon, 08 Jul 2024 04:26:39 +0000

In reply to Kashish Jindal. Credit risk is basically assessment of the repayment capacity of borrower. For example, if its a T bill of G Sec, I know the borrower is Govt of India, therefore the credit risk is very little to nil. However, if the borrower is a corporate with weak balance sheet, then I know the borrower will have trouble repaying and hence the credit risk is high. You basically have to check the repayment ability of the borrower to get a sense of credit risk.

By: Kashish Jindal

Kashish Jindal — Sun, 07 Jul 2024 18:54:04 +0000

I saw the SBI MAGNUM MEDIUM DURATION FUND and its portfolio consists of investments in two different things one is CP and the rset is all in non convertible debentures. I am not getting how to see for the credit risk. Kindly explain me the answer to this question

By: Karthik Rangappa

Karthik Rangappa — Fri, 05 Jul 2024 01:47:59 +0000

In reply to Joshith. Yes, also do check other's reply.

By: Joshith

Joshith — Thu, 04 Jul 2024 08:34:41 +0000

Here is a task for you – why do you think Nippon India’s low duration fund has a higher modified duration? Can you look into their portfolio (as of April 2020) and get your answer?

Is it because Nippon has few AA and A bonds which adds to interest rate risk , thus having higher modified duration , where IDFC has 100% AAA bonds thus have low interest risk thus low modified duration.

Am I correct?

By: Karthik Rangappa

Karthik Rangappa — Sun, 02 Jun 2024 10:51:42 +0000

In reply to Ritwik Durga. Thats right Ritwik. In the comments, do check the previous answers as well :)

By: Ritwik Durga

Ritwik Durga — Sat, 01 Jun 2024 17:49:27 +0000

Hello sir,
I want to know your thoughts on my answer for the question asked in here:
Here is a task for you – why do you think Nippon India’s low duration fund has a higher modified duration? Can you look into their portfolio (as of April 2020) and get your answer?

I think that the longer the longer a bond takes to mature, the more its price will change when interest rates go up or down. This is because there’s more time for interest rate changes to impact the overall value of the bond’s future payments.

So is this reasoning correct or am i missing something.

Thank you for this knowledge that you are providing. 🙂

By: Karthik Rangappa

Karthik Rangappa — Sat, 18 May 2024 04:28:41 +0000

In reply to Mustan. Its a zero coupon bond, meaning there is no interest, but the bond itself is purchased at a discount to par and you get par value upon maturity.