Will their value (for those currently holding them) increase or decrease?
2007-07-11 04:14:26 · 4 answers · asked by Anonymous in Business & Finance ➔ Investing
If the market fell that far then the Fed would be forced to lower interest rates down to the 2002 rates to encourage spending. That would cause current bonds to skyrocket in price because if you could get a 6% return on a bond that you currently own and similar bonds were only paying a 3% after the market fall, people would have to pay more to get the 6% returning bond.
2007-07-11 17:48:27 · answer #1 · answered by Heather M 2 · 0⤊ 0⤋
They'll go down.
If the Dow goes down a bunch it becomes more attractive to buy and will compete with bonds for investment dollars. Bond holders will sell bonds (driving down their price) in order to buy stocks.
In general stock and bond prices move in tandem over the long term and opposite each other over the short term (say, a single day). Yesterday is a perfect example of the latter.
2007-07-11 11:22:11 · answer #2 · answered by Box815 3 · 0⤊ 0⤋
Lets hope that doesnt happen. If you hold them they will stay the same until maturity. If you want to get out early the will probably be higher. This is just a rule of thumb. Other factors can be involved with the specific bonds invested in.
2007-07-11 11:21:55 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Why do people never look at history?
For that to happen, the market would have to lose 25% of its value -- roughly what it lost in the 1987 crash. Following that crash, there was a "flight to quality" causing bond prices to rise dramatically.
I see no reason why the same thing wouldn't happen the next time the market crashes.
2007-07-11 18:06:45 · answer #4 · answered by Ranto 7 · 1⤊ 0⤋