Municipal Bond Forum
Premium bonds put all invested dollars to work
Q
I love your News and Perspectives and learn much from them. In your article, “Seek Out The Misunderstood Premium Bonds,” you said: “Remember, when buying a premium bond, every dollar invested is working at the stated yields, even the premium dollars.” Can you explain how the premium dollars are working at the stated yields?
A
James A. Klotz responds:
Yield calculations are computed using the total dollars invested. This is the reason all invested dollars are working at the stated yields, even the premium dollars.
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