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Question about bonds and traders!?


If a trader bought a bond at, say 6% interest and sold it at 8% where is he making money? Don't quite get this concept :D

If you bought a bond when it was yielding 6% and then sold it when it was yielding 8% ... then you didn't make money because the price has to go lower for that to happen.

A side note: Individual investors should not buy individual bonds because the spreads are so wide that it will wreck your chance of making money. (Need to be able to buy 100k of one bond to get good fill prices IMO.) Stick to bond funds or bond ETFs IMHO.

bond values vary inversly with interest rate changes. If the interest rate goes up, then the value of the bond goes down. So In this case I'm going to assume the trader lost money on the bond.

Also we don't know how much time was between the purchase and sale, so the trader could have also earned some interest income along the way

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