Quote:
Originally Posted by Tervuren
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The interest rate on the bonds is driven by demand to hold those bonds. As demand goes up, the interest rate goes down...
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I find this interesting.
I always that thought that bond "funds" went up as a result of interest rates falling.
(if rates are falling, and if you need the money out of your bond, I'd like to buy your bond that you are holding that pays a higher rate than the going interest rate, ad if I expect rates to fall further, I may be willing to pay a bit more for it).
I haven't looked at new issue bonds though. For them I thought that they chased the interest rates downward, just paying a bit more than the bank account interest rates to still make them appealing.
Thoughts??