Why are bond prices inversely related to interest rates ?
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Answer Posted / sharad kakkar
suppose the market interest rate is 5%....
u take a bond at this interest for 1000$......
suppose the market interest goes up to 7%
now the value(price) of yr bond will go down as it will be more profitable for ppl to invest in current new bonds @7%, so the market value of yr bond bought at 1000 $ will go down......
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