"Synthetic Bonds"

Before we talk about "synthetic" bonds, let's look at what "real" bonds yield today.

                                                                   U. S. Treasury Yields

Now let's adopt a different way of thinking about "yield" or "investment return".

Instead of thinking of an "annual" return of 12%...

...think of 1% achieved in a month ( x 12) as a 12% "annualized" return...

...or .46% achieved in 2 weeks (X 26) as a 12% "annualized" return...

...or .23% achieved in 1 week (x 52) as a 12% "annualized" return. **

Synthetic Bonds are structured so as to generate modest returns in short periods of time that translate to significant "annualized" returns, which if done continually will eventually translate into significant "annual" returns...typically between 7% - 12%.

Now let's talk about PROBABILITIES.

We think in terms of a "real" bond being able to deliver it's stated interest and returning the investor's principal at maturity as having close to a 100% probability of success,  particularly if it is a U. S. Treasury bond.

Synthetic Bonds  are created by combining different securities together so as to deliver  a specific "annualized" return within a short period of time...much like a T-Bill...with a success probability of 90% to 95%. 

The specific parameters of any given Synthetic Bond...duration, targeted annualized return and probability of success...are known before any trades are executed.

                                           Questions: cyberterrys@hotmail.com

** Compounding of interest and taxes are not taken into account in this section.