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Message Have you compared the bond/yield of other helicopter EMS companies? Four factors affect the bond market including interest rates, inflation, and credit rating. Other companies are probably experiencing the same trend.
- Bonds are subject to interest rate risk since rising rates will result in falling prices (and vice-versa).
- Interest rates respond to inflation: when prices in an economy rise, the central bank typically raises its target rate to cool down an overheating economy.
- Inflation also erodes the real value of a bond's face value, which is a particular concern for longer maturity debts.
- Because of these linkages, bond prices are quite sensitive to changes in inflation and inflation forecasts.
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