Relationship Between Interest Rates & Bond Prices | (Part 1)

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[NicholasBall]

Biggest lesson i learnt in 2023 in the Bonds market is that nobody knows what is going to happen next, so practice some humility and low a strategy with a long term edge.

[thefoodavenue]

For those who are confused here we go :-

Bond prices aur interest rates kay beech ulta relation hai yaani jab interest rates upar jaate hai tabh existing bonds kay prices neeche aate hai kyunki tabh koi bhi unn purane aur kam interest dene wale bonds ko nahi khareedtaay aur kyun khareedey agar unko aur zyada interest dene wale avenues pay paisa invest karne ko mil raha hai toh jiske kaaran bonds ki demand Kam jaati hai aur unkay price bhi . Uske biparith jab interest rates neeche jaatey hai tabh log FD jaise investment avenues say zyada bharosa bonds par karte hai kyunki bonds FDs say zyada interest provide karte hai aur kyunki bonds par ek tarah ka fixed interest payment obligation hota hai toh isliye bonds par interest rates neeche aane ka koi asar nahi hota hai aur woh same interest provide karta hai jaisay pehle karta tha aur isih karan say bonds ki demand phirse badh jaati hai aur uski prices eventually badh jaati hai .

[thefoodavenue]

Another simple example :-

2022 :- ( when the bond is purchased by you )
Bond price - 100, Coupon Rate ( Bond ka Interest rate ) - 10 % yaani ₹10

Interest rates - 7%

2023 :- ( when interest rate is up and bond price is down )

Interest rate - 12 % ( for your easy understanding)

Bond price - 90 ( as demand goes down due to rise in interest rates ) , Coupon rate - 10%, still ₹10 (as coupon rate is paid on face value of 100 )

2024 :- ( When interest rates cone down and bond prices go up )

Interest rate :- 5%


Bond Price :- 110, and coupon rate is still ₹10 which is calculated on the bonds face value of ₹100, Bond price went up because more and more people are demanding for Bonds instead of FDs because of their ( Bond's ) attractive and higher interest rates .

[indrajit]

First time, I didn't get it completely..otherwise your explanation is always above the mark..

[adeeshgarg]

For everyone confused, when interest rate will increase, bank would issue new bonds with either high interest rate or lower prices, to match the national interest rate so the older bonds won't have as much value in the bond market so they would have to sell to stop incurring more loss, remember most players in the bond market aren't there for the interest but for the profit by buying and selling bonds, by speculating when can repo rate change and even for those for the interest, it is almost every time better to incurr the loss and invest the money in new bonds, rather than let the money stuck in older bonds

[pankajanand]

Bond rate decrease with increase in bank interest rate and bond rate increase with decrease in bank interest rate ❤

[saahilhela]

Bond yields increases on reselling it in secondary market.

[InvestWithGirish]

People didn't understood video properly, just saying bond mein loss ho jayega😅

[WorstFriendisAvailable]

Le economics students: Ye to mera roj ka hai 😂

[faizalashraf]

Legends say that munnu is still waiting for his cycle

[deadshot]

Interest rate fluctuate isliye hote h kyunki market kabhi inflation mein aur deflation mein.
Demand Kam hone ke wajah se interest rate zada hota h and vice versa.taki stability bani rahe aur equilibrium level mein hi rahe.

[amazingsk]

Kuchh bhi ho jaye
But gattu ki cycle 🤣🤣🤣🤣🤣🤣

[ShaileshMalviya-oe]

Bhai second buyer ko 12% interest kese milega Explanation plz

[SarkasticPunit]

Bhaiya ek video aur simplified krke bna dijiye
ISME smajh nhi aaya ....

[sanjaybindal]

Which Bonds available in primary market

[MackBrother]

mera one question h yaddi fed n apna instret rate ko up kiya to indian market up hogga ya phir down

[shayriking]

If i sell in discounted price that will my loss, i am confused, So can anyone help me to understand the matter... pls

[anubhavmallick]

Bhai agar hum bond ko 100 mai kharid ke 90 mai bechenge, toh humara toh loss hai na ??.

[rahusaxena]

Gattu ki cycle nahi aayegi lag raha hai 😅

[spidergirl]

But bonds 90 rs me q bikega? Jab 100 me to liya tha