Answer / sivaguru g

As the interest rate increases the price value of bond
decreases. This is due to increase in interest rate
encourage the investors in investing Bank deposits over
which they get return with very minimal risk. Hence the
demand for Bond will come down which leads to decrease in
bond price.

Answer / sharad kakkar

suppose the market interest rate is 5%....
u take a bond at this interest for 1000$......
suppose the market interest goes up to 7%
now the value(price) of yr bond will go down as it will be more profitable for ppl to invest in current new bonds @7%, so the market value of yr bond bought at 1000 $ will go down......

Answer / vidit johri

bond prices = p.v of (coupon payments + redemption value)
the above payments are discounted by current
interest rates...
eg if roi is 5 % then the coupon payment due after 1yr
would b C.P/(1+.05)
SO if rates increase to 7% then the picture wud b
C.P/(1+.07)
hence the PRESENT VALUE OF THE BOND DECREASES....
THEREFORE THEY ARE INVERSELY PROPOTIONAL...

Answer / shobhit gupta

when interest rate increes then bond price inversely
because when interest rate will be incress then public
invest in bank and get return more then bond whith less
risk and no one in the market for buying bond .

Answer / nagasarada

At first glance, the inverse relationship between interest
rates and bond prices seems somewhat illogical, but upon
closer examination, it makes sense. An easy way to grasp
why bond prices move opposite to interest rates is to
consider zero-coupon bonds, which don't pay coupons but
derive their value from the difference between the purchase
price and the par value paid at maturity.

accounting equation includes

5 Answers   FactSet Systems,

hi Im Vinuta... I have been studing in MBA 4th sem and i have a 4 months project to do, im intersted to do a project in Life Insurance, plz help me to find out a suitable topic to do, where in i will be able to gain knowledge and worth of doing it....i have been doing a project in Artha Money...plzz help me out !!!!

1 Answers  

What is a Reverse Repo Rate? What is SLR Rate?

0 Answers  

i have received bill from civil work contractor in that they charges Service tax & vat on same amount & .Please clarify

2 Answers  

In the banking scenario, what are the essential needs of the banking industry?

0 Answers  

Explain the different ways you can operate your accounts?

0 Answers  

Explain with any real or imaginary example, the four generic Strategy Alternatives for Marketing

0 Answers  

What are the different government policies towards unemployment?

0 Answers   RBI,

Explain About Openpages Model Risk Governance?

0 Answers   IBM,

If you take home loan for 10 lacs and what is the margin?

0 Answers   State Bank Of India SBI,

financial managers are responsible for obtaining and using funds in a way that will maximize the value of the firms. Please explain.

0 Answers  

Tell about TDR/ STDR?

0 Answers   IBPS,