Cue the 100 watt bulb!
Mar. 23rd, 2005 07:07 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
anigoLet's say you have a 10-year, $5,000 bond with a coupon rate of 5%. If interest rates go up, new bond issues might have coupon rates of 6%. This means an investor can earn more interest from buying a new bond instead of yours. This reduces your bond's value, causing you to sell it at a discounted price.
New bond issues might have a coupon rate of 6%.
Nobody told me that we were comparing old bonds to new bonds. I thought the company always sold bonds for the same amount of money and at the same interest rate. Yay for the internet!! (Thanks![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
gunhed)
Further in an article...
In a bullish bond market, investors buy bonds to take advantage of an expected fall in interest rates and a rise in bond prices.
I thought that read "In a bullshit bond market". Well, my friends, if you're looking for the bullshit market, you've come to the right place.
New bond issues might have a coupon rate of 6%.
Nobody told me that we were comparing old bonds to new bonds. I thought the company always sold bonds for the same amount of money and at the same interest rate. Yay for the internet!! (Thanks
gunhed)Further in an article...
In a bullish bond market, investors buy bonds to take advantage of an expected fall in interest rates and a rise in bond prices.
I thought that read "In a bullshit bond market". Well, my friends, if you're looking for the bullshit market, you've come to the right place.