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To: Pelham

I think we need to ‘splain to folks how bond trading works - ie, bonds are issued at par, heavy bidding means the price goes up, yield to maturity (or call) goes down, etc.

Got a quick reference URL you could flip up for folks?


119 posted on 01/03/2010 9:09:59 PM PST by NVDave
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To: NVDave

No URL, but I usually just use the image of a see-saw to explain how bond pricing works. Bond prices on one end and interest rates on the other.

Most people seem to find that that example helps them remember how interest rates affect bond prices. Interest rates rise, then bond prices fall. Interest rates fall, then bond prices rise. It doesn’t tell them everything but it does give them a useful tool.


121 posted on 01/03/2010 9:20:48 PM PST by Pelham (ObamaCare, it comes with a toe tag)
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