A bond's coupon is fixed, so higher rates make it worth less
The interest a bond pays is set when it is issued, so when rates in the market rise it starts to look poor by comparison. Its price falls until a buyer's return lines up with what is available elsewhere. Held to maturity the face value still comes back, so the fall only becomes real if you sell.
A one-point rise in rates knocks about 5% off a bond with five years left.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.