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I am buying bonds and preferreds and wonder if somebody may give me some insight as to what affects the price of these investments. For example, I understand that bonds are bought on auction just as a stock is: therefore if demand is up (as it might be now when the market is weak)the price may go up. But when Greenspan raises interest rates the value (price?) of the bond drops. So, if I am holding a bond, and the market is weak, can I assume that the value will increase as demand goes up, while if interest rates are increased by the Fed, the price will then drop?

What about preferreds: in an attempt to get addiitonal yield I am looking at various high grade preferreds. Are the preferred prices affected in a similar manner as described above for bonds.

Thank you
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