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What affects bond price?
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24th Feb 2011 by admint
Interest rate risk affects the bond price. If current interest rates goes up and is greater than a bond's coupon rate, the bond will sell below its face value at a discount. When interest rates go down and is less than the coupon rate, the bond can be sold at a premium--higher than the face value. A bond's interest rate is related to the current prevailing interest rates and the perceived risk of the issuer.
Interest rate risk affects the bond price. If current interest rates goes up and is greater than a bond's coupon rate, the bond will sell below its face value at a discount. When interest rates go down and is less than the coupon rate, the bond can be sold at a premium--higher than the face value. A bond's interest rate is related to the current prevailing interest rates and the perceived risk of the issuer.
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1st Nov 2009 In Bonds
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Subjects: bond,
bond price,