when do bond prices change?

fmjvertigo123

Member
53 1
hey guys, am i right in thinking that bonds offer a better percentage return, when at the bottom of the business cycle, because it needs money to reboost the company?
i suppose despearte companys offer better returns right?
what would you say is the average percentage return on bonds?

sorry for all the questions :D
 

Rhody Trader

Senior member
2,620 264
Actually, at the bottom of the business cycle bonds are usually an under-performer because rates are generally low (low demand for borrowing and central bank action).
 

fmjvertigo123

Member
53 1
ok, so your saying they'd rather get bank loans, than issue bonds at the bottom of the business cycle? does that mean in general, bonds offer a better return at the peak?
 

Rhody Trader

Senior member
2,620 264
It has nothing to do with bank vs. bond. It has to do with companies not interested in borrowing - low credit demand. Bonds do tend to perform better from the peak of a cycle in terms of total return because that's usually the interest rate peak.
 

fmjvertigo123

Member
53 1
why would they do better when interest rates are at its peak? if you dont mind me asking rhody :D
 

intradaybill

Well-known member
358 14
why would they do better when interest rates are at its peak? if you dont mind me asking rhody :D
The price of bonds is inversely related to interest rates. Rates go up, prices go down. When interest rates are at a peak, bonds are cheap. Now bonds are expensive, still.
 

Rhody Trader

Senior member
2,620 264
Because you lock in a high coupon yield and the price of the bond will rise as market rates fall, so you'll get a capital gains kicker as well. It's the reverse at the other end of the cycle.
 

joyHanes

Newbie
2 0
You should always consider that before selecting a maturity date for a bond consider when you will need your principal. There are times that if you sell before the bond matures, interest rate and credit rating changes will affect the selling price.
 

Jessiee

Newbie
8 0
I think at this modern era bonds are out of date financial tools to make investment .you should check out the market situation and if you have the favorable situation then i suggest you can have a try but don't invest too much it in.
 

Rhody Trader

Senior member
2,620 264
I think at this modern era bonds are out of date financial tools to make investment .
Bonds, like stocks, serve a purpose in a portfolio. They are not out of date, though they may not be as favored in the current environment as they have been in the past.
 

Similar threads