/biz/ - Business & Finance

Let's say I have a bunch of 10Y bonds that I bought, that yield 1.5%
Now interest rates go up, therefore new bonds are far more lucrative
This diminishes the value of those 1.5% yield bonds, but what I don't understand is the math behind why the value of these less lucrative bonds gets demolished so hard

If you lend the government $1000, isn't the only difference of the bonds the principal + interest you're getting back
let's say 1.5% vs 5%
so $1001.5 versus $1005 on maturity date
Now why would the 1.5% cause 20-30% loss on the underlying value of the bond?

Thank you sirs, and do not redeem

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