What is a Bull Bonds
Bull bond is the term used to refer to bonds that are likely to increase in price in a bull market.
Breaking Down The ‘Bull Bond’
Bull bond is a special type of bond that does particularly well in a bull market. Bull strengthens the bonds, reducing interest rates, which distinguishes it from many other types of bonds, most of which tend to increase in value when interest rates rise.
What are the Common types of the bull bonds?
The most common example of a bull bond is the principal-only strips of mortgage-backed securities. While most bonds will rise in a falling market rate, mortgage-backed securities, to perform especially well.
And Principal-only strips of mortgage-backed securities are securities with fixed income when the holder receives non-interest portion of monthly payments on the main loan pool mortgage-backed securities. Pic of mortgage-backed securities and lower market rate, because mortgage holders refinance their loans at lower interest rates. Investors are then repaid quickly their initial investment, increasing the return on bonds mortgage-backed security.
Although many of the bull bonds tend to be mortgage bonds, there are different types of bonds that perform well during a bull market, and, thus, is defined as the bull of the bonds. In General, the bond market can be divided into corporate bonds, government and Agency bonds, municipal bonds, asset-backed bonds, and collateralized debt obligations, except for mortgage-backed bonds.
What makes a bull market?
Bull market is a financial market, marked by optimism and investor confidence. This is most often used to refer to the stock market, but can be applied to anything that is traded such as bonds, currencies and commodities.
Since market trends are hard to predict, as the psychological effects and speculation, sometimes play a big role in the market, bull markets usually recognized only after they happened. One accepted definition of a bull market is when stock prices rise by 20 per cent after falling 20 per cent and up to 20 percent.
Bull markets are characterized by strong or strengthening economy, low unemployment and rising corporate profits. In a bull market, investors are more willing to participate in the stock market in order to make a profit. Investors who want to benefit from the bull market should buy early to take advantage of rising prices and sell them when they peaked.
The average bull market lasts 9 years, while the opposite, a bear market lasts an average of 1.4 years.