In bonds, does YTM and bond prices go in the same direction or inverse ? - inverse bond etf
I know that the interest rate market and bond prices will be reversed, but to go as the YTM?
Saturday, January 23, 2010
Inverse Bond Etf In Bonds, Does YTM And Bond Prices Go In The Same Direction Or Inverse ?
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YTM and the price move in the opposite direction. The simple way to think about it is like a See Saw, bond prices on the one hand, and the yield to maturity or (yield to maturity) on the other. The YTM is the total return you get when you buy the connection at that price, then hold it until maturity. So, if the price rises, then the yield is to maturity is upwards. Ultimately, if you buy a premium (or more than the value of the bond at maturity), the yield to maturity is less than the coupon. If you (less than the value of bonds payable at maturity or to buy the discount), then the yield to maturity will exceed the discount rate. Of course, this assumes all the obligations mature and others are not.
ReplyDeleteIt may represent the production or the market yield to maturity. Both are interest rates and the annual interest payment by the current market value of the loan portfolio is divided (return of the market), or annual interest, the future price of the bond value divided) face value (return on investment. Since the bond is above or below the nominal value of trade is the best way to answer your question recognize that more closely over time, the rate of return at maturity interest rate bonds issued. That, of course, if by default.
ReplyDeleteYTM * is * an interest rate.
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