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The implications for bond prices of changes in interest rates

January 2012
There is a direct relationship between interest rates (the yield curve) and bond prices. However, because a certain degree of interest rate change is already priced into the market, the relationship is not as simple as "if yields go up, bond prices fall, and vice versa". How should investors take account of this as they make investment decisions?
Download this Practice Note for practical information to help you make sound investment choices.
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Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
USI-12205
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