Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Joseph Silent who wrote (43957)	1/9/2012 7:40:35 PM
From: ggersh	Respond to of 71475

Rate goes higher, price goes lower, it get's confusing that's WS mo. I've traded bonds for 25 years and still get confused, but I grew up in the 60's.-g-

To: Joseph Silent who wrote (43957)	1/9/2012 7:42:10 PM
From: Real Man	Read Replies (2) \| Respond to of 71475

Ah, it's simple. I meant bond price in that post. Price drops, rates rise. Rates drop, price rises. Bond price is Bprice = P Exp (- R T), where P is principal, T is time to maturity, R is interest rate for time T, if all coupons (payments) are stripped, and it pays nothing. If it pays something, you have to sum up all payments with appropriate Exp ( - R t) factors to get the price and the sum gets a bit complicated, but the relationship is the same. For zero coupon bond the inverse relationship is most transparent -g-