Trading Behavior On The Transaction Value Of The Bonds And Interest Rate Risk

Discounted Cash Flows (DCF) method is used by this research to clarify the differences between the theoretical value and the investmental value of tradable bonds, which are defined by the research. Theoretical value is independent of trading behavior while investmental value depends on the trading behavior. Also, Duration is used by he research to show the differences between the theoretical interest risk and the investmental interest risk, which are defined by the research.According to the research of simulated trading behavior of investor, the relations and differences between the theoretical value and the investmental value, also the theoretical interest risk and the investmental interest risk, come out. And Empirical Analysis is also done at the end of this article.The conclusion is that the theoretical value and the investmental value of tradable bonds will vary according to the trading behavior. However, the theoretical interest risk is higher than the investmental interest risk of tradable bonds.