The Basics

What affects bond prices?

Many factors influence the prices of bonds, including interest rate movements and investor demand. Bond prices move in the opposite direction of interest rates; when interest rates rise, bond prices fall, and vice versa. If you buy a bond at a discount and hold the bond for its full term, you will get all your money back plus interest. If there is not much investor demand for a particular bond, the issuer may have to lower the price of the bond in order to create more demand for it.


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