Interest Risk in Bills Investment

 The value of the bonds you have has increased as the interest rate decreases and the interest rate decreases. In general, longer term bonds are more affected by the movements in interest rates. However, if you are going to carry the bond in your hand until the due date, the price movements will not affect you much. In any case, you are the principal and the initial agreement ... 

Money Status

The value of the bonds you have has increased as the interest rate decreases and the interest rate decreases. In general, longer term bonds are more affected by the movements in interest rates. However, if you are going to carry the bond in your hand until the due date, the price movements will not affect you much. In any case, you receive the principal and the interest you initially agreed upon. 

The interest rate risk, as explained above, is the risk arising from the volatility in the value of your bond portfolio according to the current interest rate in the market. 

The inverse relationship between interest and bond price, one falling and the other falling is difficult to grasp the many investors who are not experts. We can explain:

• While interest rates rise, new bond issues in the market are realized with higher interest rates than the old ones. This reduces the value of the old bills carried in the portfolio.


• While the interest rates are decreasing, the new bond issues in the market are realized with less attractive interest than the old issuances. This increases the value of the old bills carried in the portfolio.

As a result, if you wish to sell and sell the bond in your portfolio before the due date, you may receive more or less money than your purchase value. 

Several economic factors affect the level and direction of interest in the market. Interest rates usually rise as economies grow and fall in slowing economies. Similarly, rising inflation leads to rising interest rates, and falling inflation causes low interest rates. Inflation is the most influential factor in interest rates. 

We tried to mention the interest rate risk above. In short, you can think of the value of the bond in your hand as the fluctuation of interest rate movements. In the next article we will talk about the risk of reinvestment.