Many people in our society invest in bonds. Perhaps you, reading this article, have invested in bonds at least once and are still investing now. Bank deposits are a form of bonds, just not labeled as ‘bonds.’ When you deposit your money in a bank, the money isn’t considered bank money. Interest is paid because the money isn’t withdrawn immediately. When you withdraw your deposited money, the bank must return the principal plus interest. This is essentially a bond. However, the only reason this differs from bonds as an investment asset is that these bank deposits are not traded on the market. If bank deposits were traded publicly, the interest rate would be evaluated in comparison with other deposits, even if the principal remains unchanged. Valuation reflects opportunity cost. This is the transaction value of bonds. When goods or assets are traded in the market, their value is re-evaluated. The core of value is comparison, and the tool for valuation is opportunity cost. That’s why CEOs...
Transactions are made at a price. The value must precede the price, and this value arises because of the limit. Everything in the world is finite. It’s frustrating and sad due to that limit, but it’s worth it in the end because you can’t do it anymore. As the limit approaches infinity, the value decreases, and the smaller the limit range, the greater the scarcity , which leads to a higher value. If there are hundreds of gold medals in one event at the Olympics , that gold medal loses its value. There is a high probability of finding value where there is a limit. Depending on one’s perspective, someone’s limitations can become opportunities. - Joseph’s “just my thoughts”