How do I evaluate government bonds?

How do I evaluate government bonds?

To evaluate government bonds, consider factors like yield, credit rating, maturity, and interest rates.

What is yield and why is it important?

Yield is the return on investment for a bond. It's important because it helps you compare the profitability of different bonds.

How do credit ratings affect bond evaluation?

Credit ratings indicate the risk of default. Higher ratings suggest lower risk, which can affect the bond's price and yield.

What should I look for in terms of maturity?

Maturity affects interest rate risk. Longer maturities may offer higher yields but come with increased risk due to rate fluctuations.

Can you explain interest rates' impact on bond prices?

When interest rates rise, bond prices typically fall, and vice versa. This inverse relationship is crucial for bond investors.