Lesson 4: Why Bond Prices Move Opposite to Rates. The single most common bond surprise for new investors.
New bonds now pay 5%. Can you still sell your old 3% bond for full price?
Reason it out — gut check.
Assessment
You own a bond that pays 3% a year. Newly issued bonds now pay 5%. If you tried to sell your 3% bond today, would a buyer pay you full price for it?
Would you pay full price for the worse deal? 🤔