How Interest Rate Changes Affect the Price of Bonds
Whether the interest rate movements are caused by Federal Reserve actions, economic conditions or inflation fears, the impact on the bond investor is the same: Rising interest rates reduce existing bond values and falling interest rates increase existing bond values.
Seems simple enough.
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But how will your bond investments be affected by changes in interest rates?
Since bonds differ by maturity, coupon rate, type of issuer and other factors, figuring out how your bond or bond portfolio will be affected by interest rate changes can be complex. Fortunately, you don't need a math degree to understand the basic concepts. Here are some simple guidelines for judging the price volatility of your bonds.
What Affects Bond Price Volatility
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Discussion
DO THE DIVIDEND $$$ INCREASE WHEN LONG TERM
BOND FUNDS FALL IN PRICE
posted about 1 year ago by Jim from Illinois
Jim, most bonds pay a fixed amount of interest, so the interest payments you receive aren't affected by the bond price. Yield, which calculates the interest payment in relation to the bond's price, does change, but not the actual interest payment made. -Charles Rotblut, AAII
posted about 1 year ago by Charles from Illinois
when interest rate start to rise:
How safe are the following:
Gnma bond funds
inflation- protected bonds in a bond fund
total bond market index fund
posted about 1 year ago by Edward from Virginia
