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Bonds

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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