Basic understanding of bonds, values, rates and yields

A bond’s yield is the discount rate that can be used to make the present value of all of the bond’s cash flows equal to its price. In other words, a bond’s price is the sum of the present value of each cash flow. Each cash flow is present-valued using the same discount factor. This discount factor is the yield.

What should I invest in when bond yields rise?

Hedge your bets by investing in inflation-proof investments and those with credit-based yields.

• Invest in Banks and Brokerage Firms. …
• Invest in Cash-Rich Companies. …
• Lock in Low Rates. …
• Buy With Financing. …
• Invest in Technology, Health Care. …
• Embrace Short-Term or Floating Rate Bonds. …
• Invest in Payroll Processing Companies.