GOVERMENT BONDS(how do they work)? (credit, investment, loan, markets)

[Albania67]

I know that it is Basically a Loan, but i'm interested in how they 'Exactly Work as in buying and selling????

[Lowexpectations]

You buy debt and the entity you loaned money to pays you interest on a set schedule and at maturity pays you back the par value

[Lyndarn]

??? A loan? Sorry..But always believed purchasing bonds was an Investment looking forward to a return after whatever period you chose??

IF you borrowed money to purchase that bond..YOU will lose..Interest rates for borrowing far outweighs whatever return you would ever get on a bond??

You have truly confused me..Truly !!

[Lowexpectations]

Originally Posted by Lyndarn

??? A loan? Sorry..But always believed purchasing bonds was an Investment looking forward to a return after whatever period you chose??

IF you borrowed money to purchase that bond..YOU will lose..Interest rates for borrowing far outweighs whatever return you would ever get on a bond??

You have truly confused me..Truly !!

You are loaning money to the govt. it may be something you considered an investment but it is a loan from you to the entity

[Lyndarn]

Here..this link may help you out~~
United States Government Bonds - Bloomberg

[Albania67]

Thanx for very quick responses!! But when a government sell a bond, how is price determined?

[Lowexpectations]

Originally Posted by Lyndarn

Here..this link may help you out~~
United States Government Bonds - Bloomberg

That doesn't explain anything

[Lyndarn]

Originally Posted by Lowexpectations

You are loaning money to the govt. it may be something you considered an investment but it is a loan from you to the entity

Sorry..but how it was phrased..it sounded like he took a loan..Sorry My bad..
anyway I added a link to a website that may help with understandings...Doesn't look like a huge profit to me..but what do I know.. Will repeat my link~

United States Government Bonds - Bloomberg

[Lowexpectations]

Originally Posted by Albania67

Thanx for very quick responses!! But when a government sell a bond, how is price determined?

Current interest rate environment, credit quality, duration, the amount you are buying or they are selling. There is a ton that goes into it

[Lyndarn]

Originally Posted by Lowexpectations

That doesn't explain anything

It explains the investment outcomes..I will look for something better that would explain it better