Demand For Bonds Falls In Tarrant

State:
Multi-State
County:
Tarrant
Control #:
US-00415BG
Format:
Word; 
Rich Text
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Description

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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FAQ

Yes, this is a truly great time to buy bonds. Rates are no longer near zero, so there is the possibility of rates falling and your bonds will appreciate when they do. It is the best time in years to buy bonds. That answers your question.

The demand curve for bonds shifts due to changes in wealth, expected relative returns, risk, and liquidity. Wealth, returns, and liquidity are positively related to demand; risk is inversely related to demand. Wealth sets the general level of demand. Investors then trade off risk for returns and liquidity.

"Lower yields amid rising trade tensions signal that markets aren't buying into an immediate reflationary shock-instead, they're hedging against a broader economic slowdown," Inness added.

If the interest rate is expected to increase for any reason (including, but not limited to, expected increases in inflation), bond prices are expected to fall, so the demand will decrease (the entire demand curve will shift left).

The demand curve for bonds shifts due to changes in wealth, expected relative returns, risk, and liquidity. Wealth, returns, and liquidity are positively related to demand; risk is inversely related to demand. Wealth sets the general level of demand. Investors then trade off risk for returns and liquidity.

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Demand For Bonds Falls In Tarrant