Analysis of several factors that affect the price of bonds

Flash Bull Finance: There are three important factors;

1) Economic situation: When the entire national economy shows a downward trend, the demand for corporate funds weakens, bank loans decrease, and market interest rates fall. As far as the general law of bond determination is concerned, it is directly proportional to the interest income of the bond and inversely proportional to the market interest rate.

Leaving aside the fact that there is no need for financial institutions to sell bonds and companies to invest their money in short-term bonds, the bond market** will also rise at this time. On the contrary, when the entire national economy shows a trend of expansion, the economy prospers and the demand for capital increases. On the one hand, enterprises throw away existing bonds, on the other hand, they have asked for more loans, the interest rate will be **, and financial institutions will also ** bonds to increase loans, at this time the bonds are full of the market, and it is inevitable**.

2) Domestic prices: Prices are generally inflation. At this time, the bank will tighten the monetary policy, raise the interest rate, and the social funds will generally feel the shortage, and the market expects the yield to be the first, thus forcing the bond ****; On the contrary, if the price level is stable, or even stable and falling, the monetary system will be relaxed, the social funds will be abundant, the interest rate will be increased, the market expectation yield will fall, and the bond will rise.

3) Economic system: Under the dominance of a very underdeveloped planned economic system, the financial market has just started, the financial mechanism is not perfect, and bonds are subject to various restrictions. This is because many socio-political and economic factors are difficult to reflect in the volatility of the bond market; On the contrary, under an economic system with a developed commodity economy and a sound market economic system, the financial market is very developed and various financial mechanisms operate freely.

To sum up, the factors that affect the change of bonds** include economic situation, domestic prices, economic system, etc. In addition to this, there are many other factors that can affect the movement of bonds**. As investors can not analyze one by one, this needs to be leveraged, with the help of analysts' data to determine the changes in investment, in addition, you can also visit the financial network (, financial network for netizens 24 hours to provide the most timely financial news information, including information and services including the latest domestic and foreign financial news, industry reports, strategy reports, institutional announcements, market research, private disclosure, etc., financial network also has exclusive hot financial news and topics related to the production of in-depth tracking reports.

The traditional review technique has four steps, that is, to see the large range of changes, collect information-level information, find the relevant factors of changes, and insist on review. In the process of operation, it is actually difficult to do these four points, generally in the review will focus on the content of two points, ** What to focus on in the review skills? When resuming the market, the two most important points are yesterday's price limit, today's money-making effect and trend.

The following is an explanation of each of these two points.

First, yesterday's price limit and today's money-making effect.

How do you understand the money-making effect of yesterday's price limit? To put it simply: which type of limit stock has meat the next day, and which type of ** continues to have meat.

The money-making effect here refers to the fact that those who buy it tomorrow can get out the day after tomorrow. Generally, the ** that has a money-making effect is the most popular stock in the strongest sector. On the contrary, today's limit will be smothered tomorrow, or there is not much time to run away, and there are few opportunities, then you should be careful of this kind of **.

Second, the trend. Why should you care about trends? Mainly because the trend is an objective existence, and tomorrow's rise and fall is a subjective judgment.

When buying and selling a **, the first thing to judge is the trend, and the importance of the potential should be ranked in front of the volume and price, so it is the potential, volume and price. As long as the trend is correct, then the next step is easy. When the trend turns, don't pick up the flying knife, don't fantasize about anything ** to come to the second wave, and would rather chase the second wave when the trend rises.

The bad thing about the market is that you must avoid it, believe in your own feelings, and if there is no money-making effect and the trend is obvious, you will undoubtedly seek a dead end if you invest. Of course, the mode of operation is very related to the personality of the individual, my personality determines the above review skills, of course, not everyone is suitable, combined with their own investment style to find their own review mode is correct.

Factors influencing bond value: discount rate.

The value of the bond moves inversely to the discount rate. Time to maturity, bonds issued at a premium, with a gradual decrease in value as the maturity date approaches; Bonds issued at a discount that gradually increase in value as the maturity date approaches; Bonds issued at parity have the same value as the maturity date approaches.

Extended information: 1. The value of a bond refers to the investment in bonds.

The present value of cash inflows that investors expect to receive. The cash inflow of bonds mainly consists of interest and the principal or cash received at maturity. A bond is worth buying when the purchase** is less than the value of the bond.

According to the income capitalization pricing theory of assets, the value of any asset is discounted on the basis of the cash income expected by the investor to receive from the asset. Bond value = the total present value of future interest income + the present value of the principal or selling price due in the future. Among them, future cash inflows include interest, principal (par value) or selling price (not held to maturity); The discount rate when calculating the present value is the necessary rate of return for a risky investment.

2. There are two valuation methods for tradable bonds: (1) cash flow over the years with the present as the conversion time point.

Discounted interest is calculated on a non-integer basis. (2) Calculate the present value of previous cash flows based on the time of the latest interest payment (or the time of the last interest payment), and then convert them to the current point in time. Either way, you need to use a calculator to calculate the discount factor for non-integer periods.

Flat-rate bonds are bonds where interest is paid evenly over the time of maturity. The frequency of payments may be annual, semi-annual, or quarterly, among others. The formula for calculating the value of a flat bond is as follows:

The value of the flat bond = the present value of the interest in future periods + the present value of the face value (or selling price). A pure discount bond is a bond that promises to make a single payment at a certain date in the future. This type of bond cannot be paid in any cash by the maturity date, hence the name"Zero-coupon bonds.

1.The period to be paid. The shorter the waiting period of a bond, the closer the bond's ** is to its final value, so the longer the bond's waiting period, the lower its **.

In addition, the longer the repayment period, the greater the risk to the issuer, and therefore the lower the bond**. 2.Coupon rate.

The coupon rate of a bond is the nominal interest rate of the bond. The higher the nominal interest rate of a bond, the higher the yield to maturity and therefore the higher the selling price of the bond. 3.

Investors' profit expectations. Bond investors' earnings expectations change in response to changes in market interest rates. If market interest rates are high, investors' earnings expectations will also rise, and bonds will **.

If market interest rates fall, bonds will. 4.**Undulation.

When the price rate is light or the inflation rate is high, people will generally invest funds in real estate, foreign exchange and other areas that can maintain value in order to maintain value, resulting in a shortage of funds and bonds. 5.Corporate reputation.

If the issuer's credit rating is high, the risk of its bond is small, so its ** is high; The lower the credit rating, the lower the bond**. Therefore, in the bond market, for other bonds with the same conditions, government bonds** are generally higher than financial bonds, and financial bonds** are generally higher than corporate bonds. 6.

Political factors. It is a concentrated reflection of politics and economics and reacts on economic development. 7.

Supply and demand. The bond market** also depends on the relationship between capital and bond supply. When the economic development is on the rise, enterprises generally need to increase investment in equipment, so on the one hand, they will sell bonds because they are in urgent need of funds; On the other hand, they will borrow from financial institutions or issue corporate bonds, which will tighten the funds in the market, increase the ** of bonds, and thus lead to bonds.

When the economy is in recession, the demand for funds from production enterprises will decrease, and financial institutions will have a surplus of funds due to the decrease in loans, which will increase investment in bonds, resulting in bonds. However, when the bank, financial sector and foreign exchange management department carry out macroeconomic regulation and control of the economy, it often causes changes in the supply of funds in the market, which is generally reflected in the changes in interest rates and exchange rates, which causes the rise and fall of bonds. 8.

Speculative factors. In bond trading, people always try their best to earn the difference, and some powerful large institutions will use the ** or bonds in their hands for technical operations.

1. Pending period.

The shorter the bond's outstanding period, the closer the bond's ** is to its final value, so the longer the bond's outstanding period, the lower its **.

2.Coupon rate.

The coupon rate of a bond is also the nominal interest rate of the bond, and the higher the nominal interest rate of the bond, the greater the return at maturity, so the higher the selling price of the bond.

What are the main factors that affect bonds**.

3.Investors' profit expectations.

The profit forecast of bond investors changes with the market interest rate, and the enthusiasm for investment will affect the rise and fall of bonds.

4.The creditworthiness of the enterprise.

If the issuer has a high degree of creditworthiness, the risk of its bond is small, so its ** is high; If the credit level is low, its bonds** will be low.

5.Supply and demand.

The bond market** is also determined by the relationship between capital and bond supply. The upward trend of economic development will make the market tighten or overstock, which will cause the fluctuation of bonds**.

What are the main factors that affect bonds**.

6.Price fluctuations.

When the speed of prices is brisk or the inflation rate is high, people will generally invest funds in real estate, real estate and other areas that can maintain value, which will cause a shortage of funds and lead to bonds.

Bond investment. The expected return is mainly composed of two parts: the expected return of bond interest and the expected return of bond bid-ask spread, the maturity and coupon of bonds are generally fixed, so the expected return of bond interest is usually also a fixed expected return, but the bond ** and market interest rate.

It is volatile, so the expected return of the spread is not fixed, so what factors affect the bond**?

1. What factors affect bonds**?

1. Supply and demand

If the market tends to be tight, the issuance of bonds increases, and the interest rate of new bonds rises, then the stock of bonds will increase. When the company is in urgent need of funds, it will also choose to sell bonds at a discount, causing bonds. On the contrary, when the capital demand of enterprises decreases, they will increase their investment in bonds, and bonds will be corresponding.

2. Probability of default

The probability of default of a bond is the credit risk of the bond.

The higher the credit rating, the lower the probability of bond default. When an investor believes that a bond is at risk of default.

Very high, when the issuer is likely not to be able to repay the money, it will not choose to buy the bond, and the bond is **therefore**.

2. The relationship between bonds** and interest rates

1. Bonds** and the expected yield at maturity of bondsInverse proportionality

That is, the higher the bond**, the lower the expected yield of the bond held by the investor after maturity, and the lower the bond**, the higher the expected yield at maturity of the bond.

For example, a bond has a face value of $100 and an interest rate of 5%. When the bond **** reaches 102 yuan, it is ** by an investor**, then the expected rate of return at maturity is only 3%.

2. Bonds** are inversely proportional to market interest rates

When market interest rates fall, bonds **** and vice versa. For example, when the expected annualized rate of return is generally 5%, investors will choose to buy bonds even if the expected yield at maturity of the bond is only 6%. When the expected annualized rate of return** of wealth management is to 10%, even if the expected rate of return on maturity of the bond is to 8%, investors will be more inclined to buy wealth management products.

There are three scenarios in which interest rates are related to bonds**.

The first is long-term bonds, which rise and fall in the opposite direction with the rise and fall of interest rates. [1] For example, if a bond with a face value of $1,000 with a coupon rate of 9 and a repayment period of 30 years is also worth 9, then the bond** is exactly the same as its face value. But if the market interest rate is raised to 14%, the bond** is only $650.

The second scenario is that Treasury bills** are less affected by changes in interest rates because they have a short repayment period during which they can be repaid more quickly, or new bonds can replace old bonds in the short term.

The third scenario is that the more volatile the short-term interest rate, the less impact it has on the bond**. For example, a one-year maturity bond, even if the interest rate is increased by 2%, only makes the bond ****2%.

There are two types of interest rates, one is the coupon rate of bonds, and the other is the market interest rate. Let's start with the conclusion:

The higher the coupon rate of the bond, the more expensive it is to sell, because the interest income obtained is high, which should be easy to understand, to sum up, under the same conditions, the higher the coupon rate of the bond, the higher the ** of the bond, and the two change in the same direction.

The higher the market yield, the lower the bond's yield, and to sum up, under the same conditions, the bond's yield changes inversely from the market. For this article, it is explained as follows:

Bonds are fixed income products, that is, the future cash flow is certain, that is, the interest is paid regularly according to the coupon rate, and the principal is returned for the last time. For the fixed cash flow in the future, if you want to calculate today's **, you have to discount this series of cash flows, I will give you an example, a three-year bond, face value of 100, interest paid at the end of each year, coupon rate of 10%, that is, 10 yuan of interest is paid at the end of each year, and the principal will be repaid in a lump sum after maturity. So the cash flow for the next three years is (principal plus last interest).

If you want to calculate the current bond, you need to look at the current market interest rate, when the market interest rate is 9%, the bond ** = 10 (1 + 9%) + 10 (1 + 9%) 2 + 110 (1 + 9%) 3 = yuan;

If the market interest rate suddenly changes to 8%, that is, the market interest rate falls by 1 percentage point, then the bond** = 10 (1+8%) + 10 (1+8%) 2 + 110 (1+8%) 3 = yuan.

It can be seen that as interest rates fall, the ** of bonds rises, and the ** of bonds moves inversely with market yields.