How do you make money from selling a bond? and bond. gold bond.

How do you make money from selling a bond?

When you sell a bond do you make money because when the interest rates change someone is willing to pay you up front the money how much it's worth so you get that money plus the money you've been getting paid over the years?


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Answer by Mo-Mo
2 ways to make money from bonds

1. Interest payments
With most bonds, you'll get regular interest payments while you hold the bond. Most bonds have a fixed interest rate that doesn't change. Some have floating rates that go up or down over time. On the bond's maturity date, you'll get back the face value.
Example – You buy a 10-year Government of Canada bond with a face value of $ 5,000. The bond pays a fixed interest rate of 4% a year. If you hold the bond until it matures:
You'll get back $ 5,000.
You'll get back 4% in interest, or $ 200, a year.
Your return will be about $ 2,000 over 10 years ($ 200 x 10).
Floating interest bonds match the interest rate on 3-month T-bills. They pay interest quarterly. If the T-bill rate goes up, you get more interest on your bonds. If the T-bill rate drops, you get less interest.
2. Selling a bond for more than you paid
In general, when interest rates go down, bond prices go up. If this happens, you can make money by selling your bond before it matures. You'll get more than you paid for it, and you'll keep the interest you've made up until the time you sell it. Learn more about how interest rates affect bond prices.

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