Part 4/17:
Bonds are traded continuously, and their prices fluctuate with changes in interest rates. For example, bonds issued at a fixed coupon (say, 5%) become less attractive if prevailing yields climb, leading to price declines. Conversely, rising yields improve prospective returns for new buyers but create losses for those holding older bonds. This dynamic can cause significant volatility, especially when participants, such as pension funds, need to redeem or rebalance their portfolios.