You are here:

Economics/Questions about bonds market .....


1-what make price of corporate bonds increase ?  

2- if I had company with 10 millions in revenue , how can I issue bond value 1 million dollars ( in details , please )

The price of bonds increases and decreases with demand.  Investors will decide, based on the price/availability/risk associated with a particular bond what they're willing to pay for it, and if the current holder is willing to sell it for that price, then the price that they agree upon is the new market price for that bond.  It really is as simple as that.  Bond markets, like stock markets/commodities markets/derivatives markets work just like auctions, so it's all determined by supply and demand.

A company can issue as much debt as it wants.  A company with $0.00 in revenues can issue $10 million in bonds.  The reason for that is that bonds are issued in order to raise funds to expand operations.  When a company is first being created, or they want to expand their operations, they can raise funding in 2 ways: sell equity (ownership in the company) or sell debt.  With bonds, which are debt, they have to repay them because they are a type of loan.  So, the company can try to issue as much in bonds as they want, but investors have to believe that the company will be able to repay these loans.  If a company is at higher risk of default, then the company must promise higher interest rates on those loans to attract investors.  Even with the higher interest rates, they may not sell all their bonds, and only raise part of the total they were hoping to raise.

If you actually want to issue bonds, then you need to go talk to an investment banker.  They're the ones that actually evaluate your proposal, underwrite the loans, broker them on the market, etc.

I hope that helps!


All Answers

Answers by Expert:

Ask Experts


Michael Taillard


Accepts most economic questions


Economic Consulting: American Red Cross; US Strategic Command -- Economics Lecturing: Bellevue University (Bellevue, NE) Huijia College (Beijing), OPII Schools (Omaha), Madonna University (Livonia), Schoolcraft College (Livonia), ZomBCon (Seattle), Zombiefest (Lincoln) -- Media Appearances: Dead Man Working (2012 Movie documentary), The Heartland News (Omaha local news outlet)

American Economics Association, Business Networks International, Midwest Writer's Guild, Zombie Research Society

Economics and Modern Warfare: The Invisible Fist of the Market (Palgrave Macmillan) -- 101 Things Everyone Should Know about Global Economics (Adams Media) -- Corporate Finance for Dummies (Wiley) -- Psychology and Modern Warfare (Palgrave Macmillan) -- Analytics and Modern Warfare (Palgrave Macmillan)

PhD (Financial Economics; honors) -- MBA (International Business Finance; honors) -- Grad School Certificate (International Business Management; honors) -- BS (International Business Economics; honors) -- AA (Business Administration; honors) -- Certificate (Chinese Language and Culture) -- Trade School (Transportation Logistics; honors)

Awards and Honors
Philanthropy awards and nominations for the OPII Schools economic experiment

©2017 All rights reserved.