Q: Peter and Team,
Here is a question about bonds. Let's say you buy bonds of a major Canadian, credit-worthy company that mature in 2015. Let's also say that interest rates keep backing up (thinking of US 10 year) way past everyone's expectations during that time.
Is it correct to assume that, while the value of the bond you are holding goes down in the market, you get all of your money back at the maturity date in 2015? Therefore, if you hold to maturity and the company is still around, the back up in interest rates does not hurt your capital invested?
Thanks... let me know if that didn't make sense.
Here is a question about bonds. Let's say you buy bonds of a major Canadian, credit-worthy company that mature in 2015. Let's also say that interest rates keep backing up (thinking of US 10 year) way past everyone's expectations during that time.
Is it correct to assume that, while the value of the bond you are holding goes down in the market, you get all of your money back at the maturity date in 2015? Therefore, if you hold to maturity and the company is still around, the back up in interest rates does not hurt your capital invested?
Thanks... let me know if that didn't make sense.