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HB
Moderator
Joined: 20 Apr 2000
Posts: 5444
Location: Yr Hen Wlad
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 Posted: Fri Jan 01, 2010 9:18 pm Post subject: An escalator bond where the rate doesn't escalate |
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At West Brom.
3 Year Escalator Bond
Yr 1 4.00%
Yr 2 4.00%
Yr 3 4.00%
Not forgetting the 2 yr 'Escalation" from 3.37% to, yes, 3.37%
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Sterling Forever. |
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Froggitt
Wise
Joined: 25 Dec 2000
Posts: 371
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| Posted: Sat Jan 02, 2010 1:34 am Post subject: |
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| At least its not the down escalator....... |
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TOPCAT57
Oracle
Joined: 09 Aug 2004
Posts: 4540
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| Posted: Sat Jan 02, 2010 11:53 am Post subject: |
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Its the Chairman's pension that escalates!
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planteria
Wise
Joined: 21 Apr 2000
Posts: 3369
Location: going down the wednesbury road
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| Posted: Sat Jan 02, 2010 2:45 pm Post subject: |
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MarkyMarkD
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Joined: 20 Feb 2001
Posts: 497
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| Posted: Sat Jan 02, 2010 8:21 pm Post subject: |
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Er, HB's figures are wrong.
The 3 year product pays 3%, 4%, 5%.
The 2 year product pays 3.00%, 3.75%.
They do escalate, as shown.
The AERs are the average rates over the three years and hence 4.00% and 3.37%.
The AER regulations require them to show the AER alongside every other rate, hence why they repeat it year after year. |
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Trustee
Contributor
Joined: 31 Dec 2000
Posts: 1311
Location: London, UK
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| Posted: Thu Jan 07, 2010 3:04 pm Post subject: |
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| MarkyMarkD wrote: |
They do escalate, as shown.
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technically yes, but..
1. add in the effect of Inflation
2. add in the move up in the BoE interest rate by at least 0.5% in 2010 |
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MarkyMarkD
Worthy
Joined: 20 Feb 2001
Posts: 497
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| Posted: Thu Jan 07, 2010 3:23 pm Post subject: |
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You can apply that argument equally well to any fixed rate bond, but they don't have the escalation "benefit".
I'm not advocating the products - they aren't best buy rates when compared to the equivalent flat rate bonds over the same periods - but I guess some people like the fact that the rate increases. Not sure why! |
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Froggitt
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Joined: 25 Dec 2000
Posts: 371
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| Posted: Fri Jan 15, 2010 10:12 am Post subject: |
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Why let the facts ruin a good story.......  |
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planteria
Wise
Joined: 21 Apr 2000
Posts: 3369
Location: going down the wednesbury road
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| Posted: Fri Jan 15, 2010 12:21 pm Post subject: |
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