A premium bond is one that trades at a higher price than its face value or costs more than the bond’s face value. Because its interest rate is higher than the prevailing market rate, a bond may trade at a premium. The bond’s price can also be influenced by the company’s and bond’s credit ratings. […]

A discount bond is a bond that is currently trading in the secondary market for less than its par value. When a bond’s coupon rate is lower than the current interest rate, it is said to be trading at a discount. Investors will pay less for a bond with a lower coupon rate than the

Most bonds pay a set interest rate that rises in value when interest rates fall, increasing demand and raising the bond’s price. If interest rates rise, investors will no longer favor the lower fixed interest rate offered by a bond, causing its price to fall. In practice, zero-coupon bonds are a good example of how

Bonds are generally advertised as being less risky than stocks, which they are for the most part, but that doesn’t mean you can’t lose money if you purchase them. When interest rates rise, the issuer experiences a negative credit event, or market liquidity dries up, bond prices fall. Bond gains can also be eroded by

Because bonds are frequently regarded safer than stocks, they compete with equities for investor cash. Bonds, on the other hand, typically provide lesser returns. When equities fall, why do bonds rise? When investors withdraw funds from equities, they turn to less hazardous alternatives such as bonds. So, why do bonds rise while equities fall? When

In essence, a bond’s price fluctuates based on the value of the income given by its coupon payments in comparison to broader interest rates. If current interest rates rise faster than the bond’s coupon rate, the bond loses its appeal. What causes bond prices to fall? When market interest rates rise, a bond’s discount rate

Because bonds are frequently regarded safer than stocks, they compete with equities for investor cash. Bonds, on the other hand, typically provide lesser returns. Is it true that bonds always rise when equities fall? Every financial consultant you’ll ever speak with, as well as every investing article about portfolio diversification, will urge you to invest

Most bonds pay a set interest rate that rises in value when interest rates fall, increasing demand and raising the bond’s price. If interest rates rise, investors will no longer favor the lower fixed interest rate offered by a bond, causing its price to fall. In practice, zero-coupon bonds are a good example of how

Most bonds pay a set interest rate that rises in value when interest rates fall, increasing demand and raising the bond’s price. If interest rates rise, investors will no longer favor the lower fixed interest rate offered by a bond, causing its price to fall. In practice, zero-coupon bonds are a good example of how

Most bonds pay a set interest rate that rises in value when interest rates fall, increasing demand and raising the bond’s price. If interest rates rise, investors will no longer favor the lower fixed interest rate offered by a bond, causing its price to fall. In practice, zero-coupon bonds are a good example of how