Explaining Bond Prices and Bond Yields
In this revision video we work through some numerical examples of the inverse relationship between the market price of fixed-interest government bonds and the yields on those bonds.
Government bonds are fixed interest securities. This means that a bond pays a fixed annual interest – this is known as the coupon
The coupon (paid in £s, $s, Euros etc.) is fixed but the yield on a bond will vary
The yield is effectively the interest rate on a bond. The yield will vary inversely with the market price of a bond
1.When bond prices are rising, the yield will fall
2.When bond prices are falling, the yield will rise
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In this revision video we work through some numerical examples of the inverse relationship between the market price of fixed-interest government bonds and the yields on those bonds.
Government bonds are fixed interest securities. This means that a bond pays a fixed annual interest – this is known as the coupon
The coupon (paid in £s, $s, Euros etc.) is fixed but the yield on a bond will vary
The yield is effectively the interest rate on a bond. The yield will vary inversely with the market price of a bond
1.When bond prices are rising, the yield will fall
2.When bond prices are falling, the yield will rise
– – – – – – – – –
MORE ABOUT TUTOR2U ECONOMICS:
Visit tutor2u Economics for thousands of free study notes, videos, quizzes and more:
https://www.tutor2u.net/economics
A Level Economics Revision Flashcards:
https://www.tutor2u.net/economics/store/selections/alevel-economics-revision-flashcards
A Level Economics Example Top Grade Essays:
https://www.tutor2u.net/economics/store/selections/exemplar-essays-for-a-level-economics
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A very clearly explained subject
Thank you so much❤
Thank you so much, very helpful !
“Bond yields” yet you only explain current yield. What about yield to call or yield to maturity or nominal yield!???
very clear! thanks
That means Yield depends on which price we bought the bond ..correct?
Numerical was really helpful…thanx for that great explanation
Great video. Thankyou
It's a great presentation, thank you very much!!
Suparb. Its too good
This was awesome! Thank you!
Why r u considering that the interest rate is fixed? What if they change?
Very well explained, thank you!
It was really helpful sir! Thumbs up for the great work!
Wow, this is the only video that explains everything I need to know, and in a super easy-to-understand way!! Thank you so much!!!
incredible ! thank you for making this video :))))))
helpful a lot!
Thank you so much…super presentation …