[Answer] Bond prices go down when interest rates go up why?Don't investors like high interest rates?

Answer: The inverse relationship between price and interest rates of bonds is the primary reason behind fall in prices of bonds due to rising interest rates. So it is necessary to understand how price of bond and interest rates move together. Movement of prices and interest rate of bond:With the help of zero-coupon bond the relationship between prices and interest rate of bonds can be understood. E.g. if current market price of zero-coupon bond is $900 and it has a par value of $1 000 then the rate of return comes out to be (1 000 - 900)/900 i.e. 11.11%. Typically an investor must be satisfied with this return but the scenario will not last for a long period of time because bond investors like any other investors will be looking for getting more return in Bond market.Now if interest rates in bond market increases to 12% then it will make existing return on zero-coupon bond that is 11.11% less attractive to its investors. To attract more investors the price of zero-coupon bond has to decrease to the level where it can provide more than 12% return to its investors. Therefore price of zero-coupon bond will now decrease to $892 providing a (1000-892)/892 that is 12% return.***Conclusion: Therefore it can be conclude that because of the market dynamics in bond market price of bond and interest rates are inversely related to each other. That is why bond prices go down when interest rates go up and this is the reason due to which investors like rising interest rates in the bond market.****

Most relevant text from all around the web:

Bond prices go down when interest rates go up why?Don't investors like high interest rates? Ad Use Our Simple Tools To Create Your Bond Strategy. Start Today. Ad Down load This Must-Read Guide About Retirement Income From Fisher Investments. Callable bond - Wikipedia Callable bond - Wikipedia Greenspan put - Wikipedia Bridge loan - Wikipedia A callable bond (also called redeemable bond ) is a type of bond (debt security) that allows the issuer of the bond to retain the privilege of redeeming the bond at some point before the bond reaches its date of maturity. In other words on the call date(s) the issuer has the right but not the obligation to buy back the bonds from the bond holders at a defined call price . Mon Nov 14 2005 · Robert Shiller's plot of the S&P 500 price –earnings ratio (P/E) versus long-term Treasury yields (1...

Disclaimer: 

Our tool is still learning and trying its best to find the correct answer to your question. Now its your turn, "The more we share The more we have". Comment any other details to improve the description, we will update answer while you visit us next time...Kindly check our comments section, Sometimes our tool may wrong but not our users.

Are We Wrong To Think We're Right? Then Give Right Answer Below As Comment