Relationship between bond prices and interest rates | Finance & Capital Markets | Khan Academy

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Why bond prices move inversely to changes in interest rate. Created by Sal Khan.
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Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy.
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Пікірлер: 547

  • @Edwin-kv1eu
    @Edwin-kv1eu3 жыл бұрын

    Kahn helped me back in high school; now he’s helping me navigate the markets. Can’t get rid of this guy.

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    @jochem2710

    3 жыл бұрын

    Haha, great comment!

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    @salonibansal6043

    2 жыл бұрын

    Sameeeee. A big help in navigating and understanding the market concepts which I should have learned in school.

  • @PunmasterSTP

    @PunmasterSTP

    2 жыл бұрын

    Hey I'm just curious, how has investing been going?

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    @A2Cap

    2 жыл бұрын

    @@PunmasterSTP horrible lmao nassy falling 3% everyday

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    @PunmasterSTP

    2 жыл бұрын

    @@A2Cap By nassy do you mean Nasdaq? Yeah I agree things might not be the best right now. But just like you can sail into the wind, I would suppose that bear markets can present their own opportunities…

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    @CRMills Жыл бұрын

    Thanks for explaining the SVB issue 9 years ago. Makes sense

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    @WhatsUpWithSheila

    Жыл бұрын

    Exactly why I came... So I could get a better understanding of what happened❤👍

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    @J0SKXY

    Жыл бұрын

    hehe

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    @gilbertmalisa8700

    Жыл бұрын

    SVB brought me here 😅

  • @Lofibootleg
    @Lofibootleg4 жыл бұрын

    Hi, thank you so much for the video Sal! I would just like to add on in case anyone was struggling to make sense of the inverse relationship between interest rates and bond prices like I did. You can think of it as the following scenarios: 1) If interest rates in general fall, the bond's interest rates become more attractive, so people will bid up the price of the bond. 2) Likewise, if interest rates rise, people will no longer prefer the lower fixed interest rate paid by a bond, and their price will fall. Hope this helps :)

  • @ys5038

    @ys5038

    4 жыл бұрын

    thanks!

  • @ayaya864

    @ayaya864

    4 жыл бұрын

    Thank you

  • @AllYouWantAndMore

    @AllYouWantAndMore

    4 жыл бұрын

    Still don't get it

  • @JasonBong123

    @JasonBong123

    4 жыл бұрын

    This cleared it up for me. Thanks for the finishing touch kind sir!

  • @vivek447

    @vivek447

    4 жыл бұрын

    Hi Derek, Can you please explain what do you mean by interest rate here?

  • @jkxelor1295
    @jkxelor1295 Жыл бұрын

    Boom! Thanks. I now know more about economics than Janet Yellen!

  • @realrobh
    @realrobh5 жыл бұрын

    I don't know why I go to school. Why is it so much easier for me to learn from Khan Academy? ?!?!

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    @EmilioCalderonStocks

    3 жыл бұрын

    and free

  • @ttfan3257
    @ttfan32573 жыл бұрын

    Older bond will trade-at-discount-to-par ( ie older bond price falls) , when interest rates rise (for newer bonds) Older bond will trade-at-premium-to-par ( ie older bond price rises) , when interest rates fall (for newer bonds)

  • @kingwoo1900

    @kingwoo1900

    2 жыл бұрын

    So hypothetically does that means that we should buy bonds when the interest rate is the highest as one can profit from rising bond price when interest rate comes down ?

  • @vlad_shark

    @vlad_shark

    Жыл бұрын

    @@kingwoo1900 Exactly. I think like in this way too

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    @divyadixit56074 жыл бұрын

    He knows everything. Just love Khan Academy

  • @bb.edelweiss2199
    @bb.edelweiss21994 жыл бұрын

    Great teacher, thank you for contributing !

  • @Rendog2
    @Rendog23 жыл бұрын

    Finally somebody's able to put it in language I understand. Thanks!

  • @Driving4bangers
    @Driving4bangers4 жыл бұрын

    Is this the smartest guy alive ? How does he know every concept

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    @capgains

    4 жыл бұрын

    Julian Hilgemann textbooks + genetics + will

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    @ITALIANO0110

    4 жыл бұрын

    @Donald Borum is that hard

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    @DaBestAround

    4 жыл бұрын

    @@ITALIANO0110 obviously! Extremely difficult. Also, requires a lot of hard work.

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    @ITALIANO0110

    4 жыл бұрын

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    @blankneverlosegaming6374

    3 жыл бұрын

    He was a Portfolio Manager at a hedge fund

  • @PrashantSingh-jj7wr
    @PrashantSingh-jj7wr4 жыл бұрын

    Best explanation available! Thanks a ton!

  • @elvismark5172
    @elvismark5172 Жыл бұрын

    The Federal Reserve's intention to raise interest rates until inflation is under control is still viewed with skepticism by the markets, even if bond yields are rising while stock prices are falling. What is the best approach to profit from the current down market while I'm still considering whether to sell the $401,000 worth of stocks I own?

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    @waynestones

    Жыл бұрын

    If the market has taught me anything, it's that it typically makes a comeback, but I can't seem to focus on the long term, particularly because crucial factors like my retirement and my reserve are having a devastating influence on inflation. As soon as is practical, I need a solution and a data trajectory that I can trust.

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    @alexanderjames3043

    Жыл бұрын

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    @AnthonyHart34

    Жыл бұрын

    @@alexanderjames3043 Due to the significant falls, I need advice on how to rebuild my portfolio and develop more successful tactics. Where can I find this teacher?

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    @alexanderjames3043

    Жыл бұрын

    @@AnthonyHart34 In fact, I'm not sure whether I'm permitted to say this, but I'd suggest searching for "sharon lee casey" as she gained a lot of attention in 2020. She is both my coach and the manager of my portfolio.

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    @thomaslewis514

    Жыл бұрын

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  • @ethicsessay1120
    @ethicsessay11207 жыл бұрын

    Very well explained, what could take someone hours in the library to understand, you do that in 13 minutes, thank you very much.

  • @hkinfluenster8713
    @hkinfluenster87133 жыл бұрын

    Exactly the kind of lesson I was looking for. Thank you.

  • @timjacobs4457
    @timjacobs445710 жыл бұрын

    Thanks a lot for making this one! Just in time too, got stuck on my financing course and you pop up some videos.

  • @jainamturakhia4688
    @jainamturakhia46885 жыл бұрын

    Thank you so much! Was really helpful :)

  • @sharique7133
    @sharique71336 жыл бұрын

    Thank you very much. This video helped me to get the understanding of Keynes' Speculative demand theory of money.

  • @user-mv3jx2qx8r
    @user-mv3jx2qx8r6 жыл бұрын

    amazingly clear explanation. Thanks so much

  • @sagarsapkota2998
    @sagarsapkota29989 ай бұрын

    If i have a teacher like you i never feel finance is difficult from nepal😭😭😭😭🇳🇵🇳🇵🇳🇵

  • @luanateta8431
    @luanateta84314 жыл бұрын

    Each time I see you, I get light from your eyes.

  • @madras61
    @madras616 ай бұрын

    This was the best video that explains the relationship between Bond and interest rates in a simple term so that one can understand.❤

  • @ir9000
    @ir90006 жыл бұрын

    I loved your explanation. This made sense to me.

  • @johnhess4148
    @johnhess41485 ай бұрын

    THANK YOU. It took me over a half dozen videos to find this one that makes sense of this insanity. It shows the relationship in real numbers.

  • @jeremyfreetoroam
    @jeremyfreetoroam6 жыл бұрын

    Thanks for the great video and I'm glad you showed the math.

  • @catsmith7084
    @catsmith70844 жыл бұрын

    Love it ! Finally now i get it ... also watched bonds explained . I have no finance education backgroud but i am now in the mortgage industry and i can definitely benefit from this !

  • @nagasako7

    @nagasako7

    4 жыл бұрын

    I've slowly invested more into bond funds as central banks slowly cut interest rates since late 2018.

  • @PunmasterSTP

    @PunmasterSTP

    2 жыл бұрын

    @@nagasako7 I came across your comment and was just curious. If I might ask, how has your investing been going?

  • @justSTUMBLEDupon
    @justSTUMBLEDupon Жыл бұрын

    This is REALLY applying to what’s happing today. Glad it showed up on my KZread feed.

  • @SejalPatelDrSej
    @SejalPatelDrSej4 жыл бұрын

    now the real question is where can i find that 15% coupon bond lol

  • @saulcohn4844

    @saulcohn4844

    4 жыл бұрын

    ANGL junk bond etf

  • @dantheman4011

    @dantheman4011

    3 жыл бұрын

    I would even take 10%

  • @ronniebine1325

    @ronniebine1325

    3 жыл бұрын

    @@dantheman4011 I would even take 5% given that currently, the interest rate on 30 year US bond is 2.34% & 1.6% on a 10-year bond.

  • @dantheman4011

    @dantheman4011

    3 жыл бұрын

    @@ronniebine1325 which barely covers inflation.

  • @ronniebine1325

    @ronniebine1325

    3 жыл бұрын

    @@dantheman4011 Inflation will shoot up soon as theres no chance that FED can reduce it's balance sheet. Gold is on the way to shoot to the moon.

  • @diaojun161
    @diaojun1613 жыл бұрын

    Thank you so much for the explanation! Really helped me!

  • @zeytee
    @zeytee2 жыл бұрын

    The best video you can find on KZread about the relationship between interest rates and bond prices.

  • @jesseonwochei2193
    @jesseonwochei21934 жыл бұрын

    Super clear simple explanation in the most profound way.

  • @maelmare9280
    @maelmare928011 ай бұрын

    This explanation is a God sent explanation. Well done!

  • @qikong7269
    @qikong72694 жыл бұрын

    Thanks Khan Academy! You saved my finance class :P

  • @rrdawi
    @rrdawi Жыл бұрын

    Kahn is great and Sal is a good man

  • @thereversepolarbear
    @thereversepolarbear10 жыл бұрын

    That was really useful thanks. I understood it before, but this was so clear and concrete.

  • @danthemann6565
    @danthemann6565 Жыл бұрын

    Hands down the best explanation of bond price fluctuation with an excellent mathematical demonstration. Thank you so much.

  • @ThinhSan
    @ThinhSan2 жыл бұрын

    Simple and straightforward explanation, thanks.

  • @morwinmanju
    @morwinmanju10 жыл бұрын

    Sal u are doing a great and appreciable job...

  • @ananyaimtiazhussain6816
    @ananyaimtiazhussain68163 жыл бұрын

    Wonderful explanation. Thank you so much for this.

  • @samuelspencer5047
    @samuelspencer50473 жыл бұрын

    Thanks for the video. I believed that with interest rates going down it would want to drive bond holders from bonds and elsewhere due to the low yield, I guess it is true with bonds with variable rate.

  • @Noname_7775
    @Noname_77753 жыл бұрын

    Perfect explanation! Thank you

  • @ponzianomanning3071
    @ponzianomanning30713 жыл бұрын

    Thanks Sejal! That tought me in 12min. what would have taken hours to learn in finance textbook research.

  • @PunmasterSTP
    @PunmasterSTP2 жыл бұрын

    Bond prices and interest rates? More like "Better and profound information that's great!" Thanks for everything you do Sal.

  • @tatianazhdanova568
    @tatianazhdanova5682 жыл бұрын

    His writing is so pretty 🤩 every symbol is perfect!

  • @dungluu6627
    @dungluu662710 жыл бұрын

    It's usefull and simple to understand. Thanks. Please keep doing lessons like this ;)

  • @happymtonga9427
    @happymtonga9427 Жыл бұрын

    Thank you so much Sir for this explanation. You are helping alot of people out here.

  • @yashugoyal9818
    @yashugoyal98183 жыл бұрын

    Brilliance man. Really thank you ❤️

  • @orkhanhasanov1922
    @orkhanhasanov19224 жыл бұрын

    thank you, perfect!

  • @donnachandler1758
    @donnachandler1758 Жыл бұрын

    This was good. The examples were awesome. Thank you

  • @astrogeek4061
    @astrogeek40618 ай бұрын

    Explained very well. Thank you.

  • @toothsomeclips1421
    @toothsomeclips14212 жыл бұрын

    It helped sir. I was stuck in economics for 3 constant days. Thanks.

  • @mesferalotaibi7691
    @mesferalotaibi76915 жыл бұрын

    thank you so much that was helpful

  • @IkaikaArnado
    @IkaikaArnado3 жыл бұрын

    Huh. Good explanation. Definitely found that helpful.

  • @tonywallens217
    @tonywallens2173 жыл бұрын

    Never thought Id watch another Khan Academy video again in my life.

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    @abuturki4460

    3 жыл бұрын

    You don't know what you are missing

  • @chastonantonmatta
    @chastonantonmatta5 жыл бұрын

    Thanks for the video!

  • @lachlantate2379
    @lachlantate23792 жыл бұрын

    Khan academy is actually the goat. I’ve been using Khan for over 5 years now

  • @johnholme783
    @johnholme783 Жыл бұрын

    Quantitive easing makes sense now. Buying bonds increases their value thus bringing down the yield!

  • @ezilanmu9841
    @ezilanmu98413 жыл бұрын

    Finally got that from you !! thanks much

  • @WhatsUpWithSheila
    @WhatsUpWithSheila Жыл бұрын

    Thank you... I came here because of SVB... And now I understand😁👍

  • @JudaiGaeMaino
    @JudaiGaeMaino9 жыл бұрын

    Thank you so much:) I love that you have the subtitle in the video

  • @honggwan.
    @honggwan.3 жыл бұрын

    Thank you for the video. It was easy to understand and informative. Thanks. 감사합니다!

  • @cna9708
    @cna97083 жыл бұрын

    Sick calculator. Nicely explained aswell.

  • @swagerflava
    @swagerflava10 жыл бұрын

    Thank you so much!!!

  • @nikolettamatsur9716
    @nikolettamatsur9716 Жыл бұрын

    This is perfect. Thanks!

  • @saabmira
    @saabmira3 жыл бұрын

    Now that's a saver! Thank you 😘

  • @reallll2778
    @reallll277812 күн бұрын

    Great video I finally get it thank you so much!

  • @amitkumar-ip6yv
    @amitkumar-ip6yv6 жыл бұрын

    Sal, awesome video.

  • @evantipova83
    @evantipova833 жыл бұрын

    Thank you, super helpful!

  • @nobody_X24
    @nobody_X243 жыл бұрын

    Beautiful!!🙌🏾

  • @user-bp1sc1lu2i
    @user-bp1sc1lu2i8 ай бұрын

    thank you so much for this one

  • @syedahmadmuhajirsyedabdull3188
    @syedahmadmuhajirsyedabdull31883 жыл бұрын

    Great Explaination! thank you

  • @theunscriptedcouple5339
    @theunscriptedcouple5339 Жыл бұрын

    This video is a gem!

  • @javier33133
    @javier331336 жыл бұрын

    thank you, very clear

  • @jinpingxi9748
    @jinpingxi97483 жыл бұрын

    people at Khan academy are such good teachers

  • @cesarb2679
    @cesarb26799 ай бұрын

    Great video! Thanks! Is there a place where you could see bond prices?

  • @madhavishukla9816
    @madhavishukla98163 жыл бұрын

    Finally my concepts are clear ✌️

  • @user-ht7gw9ww1c
    @user-ht7gw9ww1c5 жыл бұрын

    나도 미국에서 수년가 칸아카데미 이용했던 사람으로서 이 칸 선생님응 진짜 존경한다. 미국은 달라... 이분은 공짜 무료 로 이런거 갈키는데 거의 창시자임... 미국이어서 가능 한국에서는 절대 불가능... 대학교육만 봐도 미국대학 근처에 한국처럼 술집 번화가 자체가 생겨날수 없음 그냥 닥치고 아닥하고 공부 ... 기본적으로 전문대 강사라도 해도 미국에서의 교육에대한 자부심이 쩔고 .. 내대학의 경우도 통계교수가 얘기했던게 우리가 미국에서 티칭 스킬이 10위권이다 올해는 14위로 내려갔다 이러면서 점수를 안주려고 하지만 학점에 관계없이 어려워도 이런 교수들 만나 의미있는 교육 받고 공부했다는거에 자부심이 든다. 이 칸 선생님때문에 인도사람들이 더욱 친근해지고 조아졌었징 똑똑합니다 진짜 수학 25구구단이었던가 25진법인가 까지 외우는 나라. 한국은 진짜 달라져야돼 자기 밥그릇만 챙기면 더이상 미래가 없음. 공무원 마니 뽑지 말고 중소기업 마니 뽑아요

  • @breaker2538
    @breaker25385 жыл бұрын

    Nice video! How about the yield to maturity rates though?

  • @raecole4170
    @raecole41704 жыл бұрын

    Simple , and accurate

  • @makeittrades5750
    @makeittrades57508 жыл бұрын

    Great video!

  • @khushaliraval9434
    @khushaliraval94342 жыл бұрын

    Yes, it was amazing thanks!

  • @adrianoh6485
    @adrianoh6485 Жыл бұрын

    I just the way u explained… simple terms n clearly …

  • @keatongroom
    @keatongroom5 жыл бұрын

    Beautiful explanation

  • @HezekiahDomowski
    @HezekiahDomowski6 жыл бұрын

    I like the way you think, this makes a lot of sense to me

  • @theoriserra1397
    @theoriserra13972 жыл бұрын

    Very good and easy explanation. Cheers.

  • @nareshkoyalkar8370
    @nareshkoyalkar83703 жыл бұрын

    thank you so much sir,good explanation that i ever seen before

  • @avidintovert5198
    @avidintovert51984 жыл бұрын

    Very lucidly described.. thanks.

  • @gerardobombin228
    @gerardobombin2282 жыл бұрын

    Finally, I get it! Thanks!

  • @giniwelle
    @giniwelle Жыл бұрын

    Amazingly well done.

  • @jz5748
    @jz57484 жыл бұрын

    i need this now

  • @pashuku
    @pashuku4 жыл бұрын

    Perfect. Thanks

  • @sbox001
    @sbox00110 жыл бұрын

    Thanks can you do a slightly more advanced one in context of the current situation. 10yr is trading at a premium (assume that also include the risk premium) and generally went up on the recent $10bn taper announcement. Since taper would raise rates, prices would fall, but then the fed promise low rates as well.. all quite confusing.

  • @adonisdon819
    @adonisdon8193 жыл бұрын

    Thank you very much, very helpful ❤️

  • @Captainziadkhan
    @Captainziadkhan6 жыл бұрын

    love u khan... u r always awesome

  • @hafizahharris
    @hafizahharris4 жыл бұрын

    Thank you sir!

  • @Brooklyn11236
    @Brooklyn112364 жыл бұрын

    This guy is a genius. He teaches economics and math... insane

  • @marshmallowpuff4899
    @marshmallowpuff48992 жыл бұрын

    Wow 🤩 I understand. Good explanation. Took two times though 🤯

  • @shambhuneupane3810
    @shambhuneupane38107 жыл бұрын

    i am happy

  • @incognito7054

    @incognito7054

    6 жыл бұрын

    Know what your thinking

  • @eddyvideostar

    @eddyvideostar

    6 жыл бұрын

    Shambhu Neupane: Yes, anything which is not too out of my control I am happy with my knowing this is not a chance game like the stock market, or worse, an individual stock. When you touch it, especially a rising market, there is no guarantee that it will do what you desire. Bonds are not a "greedy" vehicle. These are a nexus to the sound rewards it provides.

  • @zorba498
    @zorba4987 жыл бұрын

    omg sir you just saved my life :) Thanks a lot

  • @user-wh1nr9rr1h
    @user-wh1nr9rr1h3 жыл бұрын

    Great explanation !

  • @shubhendudeepak8943
    @shubhendudeepak89435 жыл бұрын

    498K views and 2.2K likes? Why? This is one of the simplest ways this particular subject could’ve been explained.

  • @5astelija75

    @5astelija75

    4 жыл бұрын

    Because no fancy animations, no screaming face and capital letters in thumbnail, no click-bait.

  • @mr.solomun9546

    @mr.solomun9546

    4 жыл бұрын

    The reason is that most people watch the videos through the KhanAcademy website in an embedded player where the like button and comments are not shown.

  • @TeamHomewardFound

    @TeamHomewardFound

    4 жыл бұрын

    Because people are LAZYYYY haha I ALWAYS ALWAYSSSS Like a video if I gain value from it. It's the least I can do since I'm not paying for the information. Maybe it's the "KZread Creator" in me :)

  • @TeamHomewardFound

    @TeamHomewardFound

    4 жыл бұрын

    @@5astelija75 RIGHT!!!! hahaha

  • @karangupta3670

    @karangupta3670

    3 жыл бұрын

    volume is too low