What are the main factors for the rise and fall of bond funds?
The rise and fall of bond funds are determined by two factors, one is credit risk and the other is interest rate risk:
1 credit risk. This point should be well understood, that is, the risk of not repaying the principal and interest on time. If the credit risk of bonds becomes relatively large, the market will sell bonds, resulting in a sharp drop in prices. For bonds publicly issued by listed companies, investors can judge the credit risk through their financial risk indicators, including asset-liability ratio, current ratio, speed ratio and so on.
2 Interest rate risk. The bond price is inversely proportional to the market interest rate. Bonds usually have a fixed coupon rate. When the market interest rate drops, the relative yield of bonds will increase. At this time, the demand for bonds will increase and the price of bonds will rise. When the market interest rate rises, the bond price will fall.
The above are two factors that affect the rise and fall of bond funds, and I hope it will help you.