InvestorQ : How is the price of the bond instrument determined in the debt markets?
Aditi Sharma made post

How is the price of the bond instrument determined in the debt markets?

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Aashna Tripathi answered.
1 year ago
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The price of a bond in the markets is determined by the forces of demand and supply, as is the case in any market. The price of a bond in the marketplace also depends on a number of other factors and will fluctuate according to changes in

Economic conditions

General money market conditions including the state of money supply in the economy

Interest rates prevalent in the market and the rates of new issues

Future Interest Rate Expectations

Credit quality of the issuer

There is however, a theoretical underpinning to the determination of the price of the bond in the market based on the measure of the yield of the security.

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