How do bankers or financiers make money buying and selling Bonds? and PJ Bond @ FEST 12 11.3.13-75

How do bankers or financiers make money buying and selling Bonds?

I thought you had to wait twenty-five years or more for the Bond to mature before you collect. Now I've read where some bankers and others made their fortune 'buying and selling bonds'? So how does one buy & sell a bond for profit???? How does that work??? Thanks?
What is B/D? Thank you!


Bond best answer:

Answer by Zyzzyx
Bonds can rise and fall in value. For example if you bought a bond paying 5% and later on the market changed and new bonds only paid 4%, then your bond would be more valuable. People buy and sell these on the "secondary" market.

Bond values also change when companies have problems. For example if you had a BP bond recently you might have seen its value fall from the original $ 1000 to maybe $ 950. This is because some people fear that BP might collapse and never pay off the bond. (The amount of fear is shown in the market price of the bond.)

The way to make money, then, is to buy distressed bonds at a low price and sell them when the fear goes away. If you guess wrong, you lose.

Here is a place where you can see current bond prices:
http://fixedincome.fidelity.com/fi/FIFrameset.do?page=FISearchIndividualBonds.do

Look at
Investment Grade (Secondary)
and
Non-Investment Grade / High Yield (Secondary)

Bond

PJ Bond @ FEST 12 11.3.13-75


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