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Strategies & Market Trends : today's chart
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To: browser who wrote (996)8/23/1998 12:31:00 PM
From: Claud B  Read Replies (3) of 1267
 
Robert,

There is an inverse relationship between price and yield.

As prices rise, yields decline. Perhaps you can better understand
it as it pertains to a stock.
For instance if a stock is selling at $20 and pays a dividend of
$2 then the yield is 10%. If that stock rises to $25 and still pays
$2 in dividends, the yield falls to 8%. (To do this yourself, just
divide $2.00 by $25.00) See what I mean?

Since the interest rate on a bond is fixed, as the price of the bond
rises, the yield declines.

Hope that helps.

Claud

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