Bond Demand And Interest Rates In King
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State:
Multi-State
County:
King
Control #:
US-00415BG
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Word;
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A Bond is a document with which one party promises to pay another within a specified amount of time. The term "demand" means that the principal plus any interest is due on demand by the bondholder rather than on a specific date. Bonds are used for many things, including borrowing money or guaranteeing payment of money. A bond can be given to secure performance of particular obligations, including the payment of money, or for purposes of indemnification. The validity of a "private" bond, payable upon demand, is determined by the same principles applicable to contracts generally. The purpose of the bond must not be contrary to public policy; it must be supported by a valuable consideration; and there must be a clear designation of the obligor and the obligee. A bond procured through fraud or duress may be unenforceable, but mistake on the part of the obligor as to the contents of a bond, or its legal effect, is not a defense to enforcement of the bond.
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Capital appreciation: Bond prices can rise for several reasons, including a drop in interest rates and an improvement in the credit standing of the issuer. There's going to be an inverse relationship between the interest rate and bond prices if interest rates fall bond prices are going to increase.Most bonds and interest rates have an inverse relationship. So, higher interest rates mean lower prices for existing bonds. A not too mathy explanation of why bond prices, why bond prices move in the opposite direction as interest rates. If the bond price goes up, the interest rate—or cost of the loan—goes down. Supply and demand in the bond market. Bond prices fluctuate based on interest rates, credit quality and market demand. Here's what you need to know before investing. A demand for any particular bond will be 0 if its price is above the present value and infinity if it's below.
