Bond Yield and Bond Price | How is Monetary policy linked to Bond price | News Simplified | ForumIAS

Bond yield is the return an investor realizes on a bond. The bond yield can be defined in different ways. Setting the bond yield equal to its coupon rate is the simplest definition. The current yield is a function of the bond's price and its coupon or interest payment, which will be more accurate than the coupon yield if the price of the bond is different than its face value.
In this video, we will discuss:
1. About bonds
2. G-sec, Treasury-gilt-edged security
3. Relationship between bond yield and bond price
4. Significance of the news
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#bond_yield #bond_price #bond_yeild_corelations #Types​_of_bonds #G-Sec #gilt_edged_security #forumias #newssimplified #forumias #newssimplified

[@shivnandan8944]

The best video with holistic coverage of such complex topic.... lots of appreciation.

[@ansarifaiz6368]

Thank you for clearing these confusing topics. We Appreciate your efforts 🎉

[@veerwasvaan]

धन्यवाद मैडम! बहुत ही सरल और सहज प्रकार से आपने समझाया। अपना आशीर्वाद सदैव ऐसे ही बनाये रखिये हम बच्चों पे।🙏🙏🙏🙏

[@rutikakale]

Well Explained. You made it so simple to understand. Thank you

[@zaheer1446]

Please create a playlist of all these lectures. Thank you for the best lectures

[@VivekSingh-qu5vz]

Very well explained

[@aniket2087]

Thank you ma'am... Aap UPSC ke Eco ke faculty mein 🔥🔥lagane wale ho.. Bcz ur concepts are crystal clear +Energetic Personality 👍

[@athulyasuprith2349]

Thank you mam . I understood finally

[@pragyandas743]

The best explanation ever 👍🏻

[@Tan-xv5nf]

This was well explained .Thank You .My only confusion is which interest rates do the central bank increase ,the interest rate given to banks for their deposit or the interest rates charged to banks for their loans from central bank

[@vishakhadagur8787]

It is interest rate given to the bank for their deposit.

[@Pratidhwani17]

Thank You!

[@rdevjamwal123]

Commendable explanation ! Kudos

[@Yuvrajsinh6]

Thank you so much mam. ...🙏🏻😊🙏🏻

[@mrsuvan1963]

Excellent explanation. Thanks

[@गांव-खेतकीबात]

From 15.04 your voice and concept both started floundering 😬😬

[@vimalkwilson]

Thank you

[@Kaivalya05]

Thanks a lot senior

[@prateekvarshney8574]

Your issuer sounds more like Ishwar :D

[@shreeh1882]

With due respect Ma'am, Plz correct me if I am wrong- Usually its seen that in tight monetary policy the banks would provide loans to People at high interest rate as the flow of money in the market is to be reduced so that inflation is kept under control....in such cases the investors will turn towards buying the bonds and so the Bond Price will rise and Bond Yield will reduce.....and also during tight monetary policy in order to control inflation RBI increases the Bank rate so that liquidity decreases!!.... Plz explain Ma'am....

[@malkhedsusheel8769]

with reduced money supply....demand for money increases.... so ppl are offered better avenues... so even if they are left with good amount of money they choose altenative options than bonds.... which provide better returns ... so they go for that

[@गांव-खेतकीबात]

It's actually a see saw situation Just mug it up bond yields proportional to interest rate

[@actusreus9650]

Bond price is inversely proportional to interest rates(repo) , therefore, statement 1 is wrong. Also, Bond yield is directly proportional to interest rate(repo), therefore, a tight monetary policy will lead to rise in ond yield. Therefore, both the statements are wrong.

[@spblore]

Yes bro that's what I thought in case of tight monetary policy DEMANDS FOR BONDS RISES(due to lesser avenues to invest in share mkt etc ) inturn increasing BOND PRICE AND LOWERING BOND YIELD.. But she is saying it's the opposite here😮

[@solosyiem]

I had the same doubt too bro. But you have to look at it this way: As an investor, which investment would give me the best RoI? Or where can I park my money so that I get maximum returns? 1. During tight monetary policy, RBI asks the banks to increase their interest rates. Hence every investor will now start parking their money in FDs etc to get maximum returns. This means that there will be a reduced demand for bonds and hence their prices will come down and consequently their yield will go up. 2. During loose monetary policy, RBI will ask banks to reduce the interest rates. Hence, the investor will not park his money in FDs rather he will invest in bonds. Thus bond price will go up and bond yield will come down. Hope that helps! :)

[@utsavpriyadarshi4171]

Awesome explanation

[@srivalli3200]

Bohot bohot shukriya

[@gulmohar4724]

Thank u mam

[@7observer613]

Thank you mam😊

[@jairajkishore6216]

very nice , thanks

[@arindamdutta6086]

Mam plz discuss BPS

[@avsancher383]

Nice

[@divyanarayan1930]

I just marked the same question incorrect in question paper

[@rishabharora9238]

Sovreen Bond. Got it.

[@Cricketkeet]

sovereign bond

[@sehrawatlokesh8991]

Kbhi to issuer loan dene vala hota h.. Or kbhi issuer loan lene vala hota???

[@shi_studycorner]

Why the investor invests in bank loans if can also get high bond yields in the market issued bond ?

[@ashishkumar-wg7di]

Question in prelims 2021

[@Shivamm_007_x]

Why low interest rate on government bonds depreciates the value of Indian rupee ? Can anyone explain it ?

[@Kunal_Sharma11]

No such explicit relation can be established but if..Interest rate or coupon rate low-- bond price low-- bond price low because demand will be low-- then more bonds can be bought for the same amount of money-- and when you can buy more amount in same value it simply represents appreciation of domestic currency! 🙏

[@amrit1927]

👍👍💜

[@livinglegend160]

When Interest rates increase, why would bank pay investors with high interest rate..

[@vishakhadagur8787]

In ideal monetary policy transmission, cut or rise in interest rate are transferred by banks to their investors. Like if banks are getting cheap loan, they will also provide cheap loan to their investor. As their cost of taking loan is less. If one bank decide not to and other does then they will lose in competitive market.

[@livinglegend160]

@@vishakhadagur8787 mam , I mean u said when interest rises , the investor gets more return from bond investment. Can u clarify which interest rate is in case here.

[@vishakhadagur8787]

It is interest rate paid to the bank for the loan they take from RBI :)

[@गांव-खेतकीबात]

@@vishakhadagur8787 paid to bank 🤔🤔 🙄 please clear it RBI से बैंक उधार ले रहे हैं तो बैंक pay करेंगे ना

[@spblore]

Guys its wrong answer to that question the answer should be Both 1&2 are correct She is telling it wrongly..

[@SaurabhSingh-mb3vx]

Abe pehle apni english Sudhar😂

[@spblore]

@@SaurabhSingh-mb3vx let's see your comprehension correct the sentence

[@kathika0219]

Thank you