On 3 December 2014, the Chancellor confirmed that War Loan stock would be redeemed on 9 March 2015, its next interest payment date.

31/2% War Loan has been a popular holding with small private investors and of the 120,000 or so holders, 38,000 own less than £100 nominal. It’s a sentimental holding, but nonetheless an interesting one from an AF4 Investment Planning exam perspective, in the context of module 2 (cash and debt assets, which we are studying this week).

The 3 1/2% war loan stock had been trading at a discount to it’s redemption value: 96.24%

If interest rates remain the same, the price of the war loan bond trading at a discount will tend to do what?

  • What does this mean for investors?
  • Sentimental holders?
  • What yield has it been providing?

We’ll answer this in the AF4 forum in the coming days.

The full details of the Governments World War Debt repayment can be read in this Treasury press release


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