Skip to main content

Margin rates at retail brokerages are often higher than high-quality bond yields, creating a "negative carry" where the cost of borrowing exceeds the income generated. Strategic Review: Pros vs. Cons Buying on Margin: How It's Done, Risks and Rewards

The goal of buying bonds on margin is typically to profit from the spread between the bond’s yield and the margin interest rate.

If a bond yields 6% and your brokerage charges 4% for margin, you theoretically pocket a 2% "positive carry" on the borrowed funds.

Search

Buying Bonds On Margin Page

Margin rates at retail brokerages are often higher than high-quality bond yields, creating a "negative carry" where the cost of borrowing exceeds the income generated. Strategic Review: Pros vs. Cons Buying on Margin: How It's Done, Risks and Rewards

The goal of buying bonds on margin is typically to profit from the spread between the bond’s yield and the margin interest rate. buying bonds on margin

If a bond yields 6% and your brokerage charges 4% for margin, you theoretically pocket a 2% "positive carry" on the borrowed funds. Margin rates at retail brokerages are often higher