Treasury bond prices and yields | Stocks and bonds | Finance & Capital Markets | Khan Academy

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  • Опубліковано 9 тра 2011
  • Courses on Khan Academy are always 100% free. Start practicing-and saving your progress-now: www.khanacademy.org/economics...
    Why yields go down when prices go up. Created by Sal Khan.
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    Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy.
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КОМЕНТАРІ • 162

  • @CMVB92
    @CMVB92 7 років тому +106

    Good explanation, good pace, clear tone of voice, perfect! Thank you!

    • @leep3488
      @leep3488 6 років тому

      at 1.5x speed

    • @sanshizer1836
      @sanshizer1836 4 роки тому

      Appreciate video content! Sorry for chiming in, I would appreciate your opinion. Have you heard about - Ponillian Intellective Position (Sure I saw it on Google)? It is a good one of a kind guide for finding government auctions near you without the normal expense. Ive heard some unbelievable things about it and my mate at very last got cool results with it.

    • @benscratchin8014
      @benscratchin8014 3 роки тому

      Yup, good clear explanation in layman's terms.

    • @yezzzsir
      @yezzzsir 3 роки тому

      My thoughts exactly. Subbed!

  • @TammyGrabel
    @TammyGrabel 3 роки тому +39

    If I could give this a thousand thumbs up I would. I have been reading and watching videos trying to understand this concept.. and FINALLY this video made it so clear to me. Thank you.

  • @TerryLDawson
    @TerryLDawson 3 роки тому +9

    Now, that, I understand, where was this guy, when I needed him?

  • @roger_rogers
    @roger_rogers 13 років тому +19

    Love the 4 minute videos. Perfect for when I don't have time or energy to delve into science or math, I can just kick it and learn about the treasury and hedge funds!

  • @sheeplessingeorgianm9977
    @sheeplessingeorgianm9977 5 років тому +24

    Finally. I finally understand. So many thanks to you!

    • @DVDSA-rm6fv
      @DVDSA-rm6fv 3 місяці тому

      me too now is so simple...

  • @blakealboyd
    @blakealboyd 2 роки тому +2

    Wow this was such clear and straightforward language. Thank y’all’s 🙏🏾

  • @Autovetus
    @Autovetus 2 роки тому +4

    My gawd you can draw such straight lines with a mouse ! Impressive !

  • @ApartmentTrusteescom
    @ApartmentTrusteescom 10 років тому +6

    Excellent presentation ... well done!

  • @alansimon1354
    @alansimon1354 6 місяців тому

    Beautifully explained. Thanks 👍

  • @thebigdille
    @thebigdille 11 місяців тому +1

    Incredible. I was looking for this explanation. Everyone else explains this without the fundamentals.

  • @jordanthomas3346
    @jordanthomas3346 7 місяців тому

    10 years later and I'm still happy to hear his voice.

  • @jonhoward4884
    @jonhoward4884 2 роки тому +1

    Thank you, much better explained than most I've seen.

  • @ArtHoward
    @ArtHoward 3 роки тому +5

    I was confused about higher prices vs. lower yields. Now I see!

  • @MrJrobb182
    @MrJrobb182 2 роки тому

    I did so much research and couldn’t understand this. Thank you for breaking this down simply in only three minutes.

  • @antonioaguilar3257
    @antonioaguilar3257 6 років тому

    superb explanation!!! thank you!

  • @finarrykahn13
    @finarrykahn13 10 років тому +6

    Please continue what you do. These are the best illustrations of macroeconomic principles.

  • @jangofatt7135
    @jangofatt7135 3 роки тому +87

    Here after today's bloody day.

  • @amirmoezi8316
    @amirmoezi8316 2 роки тому +1

    Thanks a million for your invaluable content.. it's just wonderful

  • @epcortek11
    @epcortek11 5 років тому

    This guy is so good!

  • @teljnyazhka
    @teljnyazhka 6 років тому +4

    Thank You sir, you are an awesome teacher

  • @polesetti
    @polesetti 4 роки тому

    Perfect! Thanks

  • @nileshparmar21
    @nileshparmar21 7 років тому +2

    Excellent. Keep up the good educational work.

  • @jasonv.kennedy6796
    @jasonv.kennedy6796 9 років тому +1

    Great explaination

  • @GetMoneyCorporateA
    @GetMoneyCorporateA 8 років тому +1

    Awesome explanation

  • @Mark1Mach2
    @Mark1Mach2 3 роки тому

    Crisp and clear explanation 👌

  • @sarahvlogs5337
    @sarahvlogs5337 8 місяців тому

    thank you so much!

  • @FRYEGS6
    @FRYEGS6 6 місяців тому

    I have to agree with Tammy. I understood that if I held the bond to maturity that none of this applied to my purchase. After watching this video, It is clear as day, it is the treasury that decides how much they will pay for each bond at a certain period of time and how much they will charge you for that bond. I don't get why no one who talks about bonds could not have explained that while giving us the {talk} about rates up, price down and all that jazz. Thank you Khan Academy.

  • @therealreason953
    @therealreason953 4 роки тому +1

    Thank you!!! Great video. CNBC want to make it difficult to understand.

  • @zhayat
    @zhayat 9 років тому +2

    Great explanation on #bonds! #money

  • @fatai-ayoadeyusupha.2105
    @fatai-ayoadeyusupha.2105 Рік тому

    Explanatory. I got it towards the end. Great

  • @alexislye6743
    @alexislye6743 7 років тому +2

    thnk you!

  • @nkrulez
    @nkrulez 2 роки тому

    concise and informative video. well done

  • @flypimpinogflypimp2126
    @flypimpinogflypimp2126 2 роки тому

    Finally explained where I can understand

  • @enayathali8971
    @enayathali8971 2 місяці тому

    nice, really simple

  • @Kuziai
    @Kuziai 11 років тому +9

    LoL AT LAST I UNDERSTOOD :D thank you

  • @brentbrady4964
    @brentbrady4964 9 років тому

    Thank you.

  • @elenakylae.katipunan9926
    @elenakylae.katipunan9926 Рік тому

    Thank u SO MUCH for this

  • @michaelscalise1925
    @michaelscalise1925 Рік тому

    Thanks for the video

  • @Aditya1057
    @Aditya1057 2 роки тому

    A very good explanation, thank you very much

  • @noahschmartz2354
    @noahschmartz2354 6 місяців тому

    Khan nails it as usual.

  • @pawar_me
    @pawar_me 2 роки тому

    I finally understood ❤️

  • @civcinfo
    @civcinfo 3 роки тому +1

    The best!

  • @seisopheapanya7528
    @seisopheapanya7528 2 роки тому

    thanks a lot, sir.
    as always

  • @joses.a.2
    @joses.a.2 5 років тому

    Great explanation. Could you apply this to yesterday's event of Treasury bonds massive selling? Seems weird to see that markets fall if bond yields increases.

  • @absolutebosscollective8202
    @absolutebosscollective8202 3 роки тому

    Awesome!

  • @MohammadShehzad
    @MohammadShehzad 6 років тому +7

    I would be grateful if you could upload a video explaining the relationship between the dollar price, yield and gold price. It is very complex and I have failed to understand it.

    • @techgod3670
      @techgod3670 3 роки тому +3

      It's simple- if dollar is falling comparatively to other major currencies, investors rush to buy gold as a hedge and increase gold demand thus gold price rises.
      If treasury yield falls investors rush to gold, if treasury yield rises investors sell gold to cash in on the yield thus gold rate falls as more sellers are there(supply>demand) and treasury bond price rises as more investors create demand to buy.

    • @TravisMcGee151
      @TravisMcGee151 Рік тому

      @@techgod3670 Sorry, too simple and incorrect reply. Yields are not the same in every country in the world. The price of gold is. The same is true with the strength of the dollar. Right now very strong in the U.S. ( plus and minuses on imports and exports ) never the less gold still remains the same value per ounce all over the world.

  • @xabiergaray4264
    @xabiergaray4264 4 роки тому +1

    Thank you for making these videos. Excellent presentation. 👍👍👍👍👍

    • @xabiergaray4264
      @xabiergaray4264 4 роки тому

      I recently spoke to a "Banco Basa" president here in Paraguay in front of many people and when I was exposing how the central bank is independent from the government and how the government is indebted to the central bank; I asserted that because the government borrows money from the central bank instead of creating its own money, interest and debt free for its people to use, that that was the cause of the financial troubles in every country.
      The banker retorted with, "we don't lend money to the government we buy treasury bonds." And in the argument that we were having (he knew full well he was spinning the debate) I couldn't get the public to understand that that bond purchase was actually a clandestine loan.
      I felt defeated. But seeing your video has picked up my spirits.
      Thank you, I really needed it.

  • @user-tm3gf3tz5v
    @user-tm3gf3tz5v 11 місяців тому

    Good explanation

  • @frodrigues2008
    @frodrigues2008 7 років тому

    Hi...i would like to know the "perfect range" that a gov bond say 10Y yield should have for example the US economy?

  • @dorachdew
    @dorachdew 3 роки тому

    Amazing video

  • @ttfan3257
    @ttfan3257 3 роки тому +1

    explains how increase demand for an old bond cause a rise in that bond's price,with correspoding fall in it's yield
    Not too dissimilar with analysis of stock dividend yield calc

  • @j.a.h.a.l.a
    @j.a.h.a.l.a 2 роки тому +1

    You can buy Treasury bonds directly from the U.S. Treasury or through a bank, broker, or dealer.

  • @gonebamboo4116
    @gonebamboo4116 4 роки тому

    Great, now do an example with negative interest rates.

  • @grownupgaming
    @grownupgaming 2 роки тому

    Great vid, but what is the price when the govt issues the bond initially?

  • @LastEmpireOfMusic
    @LastEmpireOfMusic 3 роки тому

    nice calculator

  • @Daalia00
    @Daalia00 7 років тому

    like your voice,

  • @tifius
    @tifius 10 років тому +1

    Not necessarily unsustainable. What's unsustainable is having a large debt to GDP ratio. If an economy has growth then borrowing matching that growth isn't really a problem as long as debt to GDP-ratios stay in control.

  • @HafezBd
    @HafezBd Рік тому +16

    Even if bond yields are increasing while stock prices are decreasing, the markets are still skeptical whether the Federal Reserve will stick to its goal to raise interest rates until inflation is under control. While I'm still debating whether to sell my $401k worth of equities, what is the best way to profit from the present down market?

    • @harod033
      @harod033 Рік тому

      The best market strategy at the moment is working with a respected investment coach. I've been in touch with a coach for a time now, mostly because I lack the depth of understanding and mental toughness to deal with these ongoing market conditions. During this recession, I made about $700k, proving that the market is more complicated than most people think.

    • @nicolelackdavid
      @nicolelackdavid Рік тому

      @@harod033 I need suggestions to assist me recover my portfolio and create more effective strategies because of the huge dips. How do I locate this coach?

    • @harod033
      @harod033 Рік тому +1

      @@nicolelackdavid With Ruth Loralann Brennan's guidance, I've been investing for a while, and I couldn't be happier. Her company offers the broadest financial guidance currently accessible, has given me the best ROI while safeguarding my capital. It never squanders my money on dangerous speculation or poor risk-management techniques.

    • @thomasweber5
      @thomasweber5 Рік тому +1

      @@harod033 I right away looked into Sharon's past. She is adept at self-control. Her credentials are strong, and it appears that she was the subject of a thorough investigation. She also offers her services to foreign investors from other nations besides the United States.

    • @musak.4068
      @musak.4068 6 місяців тому

      @@thomasweber5 IGNORE THESE SCAMMERS

  • @danielluster732
    @danielluster732 5 років тому

    That's interesting. B-)

  • @JackMcMotivate
    @JackMcMotivate 3 роки тому +1

    This is for 0 coupon. How bout those with bi annual yield?

  • @myle6749
    @myle6749 Рік тому

    Sorry for sounding ignorant...who determines the bond price change from $950 to $980? Is this the same bond changing price, or is $980 a completely new bond being put up for sale?

  • @mnayak9348
    @mnayak9348 Рік тому

    What is coupon rate and yield

  • @jessiemayfield6749
    @jessiemayfield6749 9 днів тому

    My only problem with these videos is that they’re too simple, I’m being asked to calculate risk premiums and range of possible profits and losses on this topic, while he’s giving the introduction

  • @alexj7700
    @alexj7700 6 років тому

    wait until these bond yields go to historically normal levels , the govt will have to default on its obligations and there will be to be a restructuring.

  • @TopCyclone-rf7iy
    @TopCyclone-rf7iy 6 місяців тому

    what about inflation?

  • @emmanuelochoa2656
    @emmanuelochoa2656 6 років тому

    What if the government loses money during the time of the loan you've made them. Would they still pay you?

  • @johnhess4148
    @johnhess4148 5 місяців тому

    dammit dammit dammit I could've saved weeks if I'd found this channel first.

  • @davidalen9279
    @davidalen9279 5 років тому

    excellent

  • @reidnorris8320
    @reidnorris8320 5 років тому

    we just %100 debt/gdp today. i know that swiss is at %127/gdp. the swiss have the gold and the US has the military

  • @abetts123
    @abetts123 Рік тому

    Just do 50/950. Much easier to understand

  • @virulentme1418
    @virulentme1418 3 роки тому +1

    What does Khan not know about? Please tell me!!

  • @mr.q8023
    @mr.q8023 8 місяців тому

    If demand goes down? Forced down. What then? Japan & China selling

  • @mynamejeb8743
    @mynamejeb8743 3 роки тому +2

    5.3% interest? good like reaching that now lol

    • @shezyam460
      @shezyam460 3 роки тому

      lol the entire sections of the economy may collapse at those rates

  • @Ashley-df5ni
    @Ashley-df5ni Рік тому

    why did you divide 1000 by 950?

  • @Blc-xg5pm
    @Blc-xg5pm 3 роки тому

    So the higher the interest the better right?

    • @jensenbaits5079
      @jensenbaits5079 3 роки тому

      Correct. You earn less interest, which isn't beneficial when the price of the Treasury increases. The price of the treasury bonds increases, as a result of their greater demand.

  • @tsb7911
    @tsb7911 2 роки тому

    If a 10 year bond cost $125, do I get $100 back in 10 years or $125? I've never seen that question answered anywhere.

  • @fernandocordero1938
    @fernandocordero1938 3 роки тому

    What I don't understand is where is the 5.3% coming from? If I divide the $50.00 (the profit) over $1,000 I get 5.00% not 5.13%? Same for the price of the treasury note at 980, the actual profit is $20.00 / $1,000 = 2.00%

    • @eriksonderlon
      @eriksonderlon 3 роки тому +2

      It should be profit divided by the price paid. The profit is derived from the fact that you will be paid more for the bond at maturity than you paid for it when you bought it.

  • @alfredkwaak
    @alfredkwaak 5 років тому +3

    why is 5% 5.3%

    • @hus390
      @hus390 5 років тому +2

      He actually complicated things in the example at 2:30. Its 5.26%. He rounded it up.
      Just divide the gain of $50 by the face value of ($950) and you will get (0.0526). The yeild is often in percentage. To get it, multiply it by (100) and you will get (%52.6).

  • @toxichammertoe8696
    @toxichammertoe8696 6 місяців тому

    Now i see why banks do this.

  • @jatinkhare7740
    @jatinkhare7740 4 роки тому

    Came here to understand how your govt. is arranging all the stimulus money? yeah, me too.

  • @gunblade7610
    @gunblade7610 Рік тому

    It would be interesting how bonds would look if Government wasn't also taking so much Taxes... Oh Hai IRS agent reading my posts 😁

  • @Greg-rz2sk
    @Greg-rz2sk 2 роки тому

    I’m gonna start putting khan academy on my resumes

  • @philipflorez4160
    @philipflorez4160 8 місяців тому

    I’m here because of tmf lol

  • @jextreme22
    @jextreme22 10 років тому +3

    Correct me if I'm wrong but I thought treasury bills mature at 1 year or less, treasury notes mature between 1 - 10 years and treasury bonds mature at over 10 years... Why is the title treasury bond and then he talks about a 1 year maturity. I'm confused :(

    • @ThePartTimeEconomist
      @ThePartTimeEconomist 5 років тому

      You are correct on the terms. Other than the difference in names, all of what he is saying still applies to notes, bills, or bonds. Although it was a slip up, the information can still apply.

  • @randym5515
    @randym5515 5 років тому

    Why is it 5.3% and not 5%?

  • @Franchisetyg
    @Franchisetyg 6 років тому

    That's a 5.3 percent return

  • @iman782
    @iman782 Рік тому

    Amc stock holders are about to be filthy rich

  • @danielbrian8019
    @danielbrian8019 2 роки тому

    You could've save me some time buy just adding 10.cwnt to a dollar

  • @annoyingcommentator1582
    @annoyingcommentator1582 3 роки тому

    5% on a treasury bond?

  • @lonnieatterbury1277
    @lonnieatterbury1277 6 років тому +1

    this video was informative but seems to be over complicating things. please someone correct me if im wrong. Forget all the percent and yield information. i give the government 950 and the promise to give me 1000. 50 dollar in profit. what benift do i have of doing this? why would anyone do this am i missing something. please explain thank you because i can make more of a return with a 12 month Cd at a bank.

    • @whiskey4609
      @whiskey4609 6 років тому +1

      A thousand dollars isn't worth it lol, try 10 mil. For larger amounts of money it makes a little more sense. But typically people would diversify their investments more.

    • @herodotus53
      @herodotus53 4 роки тому

      Also, Treasuries are much more liquid than a CD- if you wanted to, you could sell them before the maturity date to purchase a higher yielding security, but as I’m sure you know, a CD locks you in for a specific length of time and you would have to pay a penalty for early withdrawal of funds from the certificate. So while the relatively small dollar amount of annual yield in the example might not be that impressive, there *is* certainly an advantage to holding investments that can be easily converted to your local currency.

  • @valleycarpentry5269
    @valleycarpentry5269 Рік тому

    My math could be off here but 1000 dollars return after a year after paying 950 dollars is more than a ten percent return....? No.?

    • @valleycarpentry5269
      @valleycarpentry5269 Рік тому

      No sorry.... I thought this was the yield.... I thought it was 100 dollars payment ie the yield or coupon.... I'm thinking of the traditional yearly yield payment....

  • @lonelylue
    @lonelylue 3 роки тому

    Who else is here because of Chris sain?

  • @junior1984able
    @junior1984able 13 років тому

    anyone wants to be my nerdy friend??

  • @DaddysFastestSwimmer
    @DaddysFastestSwimmer 5 років тому

    Ok, now what in gods name is a generic bond?

    • @laurenhilbert7805
      @laurenhilbert7805 4 роки тому +1

      This stuff always brings up more questions..... Economy and government should be covered earlier and for a greater length of time in school.... the powers that be don't want us all knowing; we easier distracted and controlled! It's time to wake up people! 😄

  • @sukhjohal8998
    @sukhjohal8998 3 місяці тому

    please, say zero!

  • @parzival2.033
    @parzival2.033 2 роки тому

    🤔Were you teaching chemistry or statistics? Because you sounded like
    more of a stat teacher
    I know that you used an illustration 😝😂

  • @katrynamcintyre5687
    @katrynamcintyre5687 6 років тому

    January 19, 2018: "The threshing floors will be full of grain, and the vats will overflow with the new wine and oil. Then I will make up to you for the years that the swarming locust has eaten, the creeping locust, the stripping locust and the gnawing locust, my great army which I sent among you. You will have plenty to eat and be satisfied and praise the name of the LORD your God, who has dealt wondrously with you; then my people will never be put to shame." Joel 2:25 KATE

  • @kashflips8839
    @kashflips8839 3 роки тому

    google (How-Australia-breaching-Declaration-Declaration-Human-Rights-stopping-travelling)
    Australia doesn't play by the rules as a country with a big disposable income they r leading consumers. consumers boycott to set examples.
    boycott the boycotts
    boycott Australia today

  • @TheBrianEffect101
    @TheBrianEffect101 6 років тому +4

    so you literally only make like 50 bucks for a year investment, thats pretty terrible

    • @lonnieatterbury1277
      @lonnieatterbury1277 6 років тому +4

      how many americans have 950 mill. not to sound like a jack ass. but are these bonds only for the rich. is ther a alternative for the common american?

    • @airot1987
      @airot1987 6 років тому

      Lonnie Atterbury doesn't look like it

    • @cryptothought2459
      @cryptothought2459 6 років тому

      If you have 950 million you don't need to invest.

    • @blackearl7891
      @blackearl7891 6 років тому +1

      Crypto Thought why wouldn't you want more

    • @cryptothought2459
      @cryptothought2459 6 років тому +1

      blackearl7891 You got a point

  • @ForgottenKnight1
    @ForgottenKnight1 5 років тому

    Lending 950 dollars to get 1000 dollars over the course of 1 year, is a 5% yearly performance, meaning about 0,42 monthly performance. I think that if people want to get into this kind of stuff, they should learn some trading basics, be it FOREX, stocks, futures, whatever. 5% yearly performance is easily achievable even for a beginner.

    • @32kirby32
      @32kirby32 5 років тому

      ForgottenKnight1 it’s for people with huge Amounts money wanting to have lower risk than stocks and other, and don’t want to keep it in the bank. Not really for a normal investor