What affect does shifting yield enjoy on the issuer’s financial statements?
Answers:
If an issuer sell bonds at 5% interest, those bonds will wage 5% interest until they are retired. If yield move up or down, those bonds will verbs to retribution 5% interest.
The translate will be contained by the marketability of the bonds. If the yield move up, spanking new bonds will be cheaper and the existing issuers will be rugged to unload. If the yield move down, the newer issues will flog for more and the issuer will want to call for the existing bonds (if they can). Otherwise, they miss out on more money.
Ron, ChFC