New Delhi, Oct. 16 -- Bonds are investment tools that offer fixed returns and relative stability. However, their market prices fluctuate based on several key factors. Understanding what influences bond prices can help investors make informed decisions and optimise their portfolios.

Investors use bonds to diversify their portfolios. Bond investments can be particularly beneficial during pessimistic economic conditions. That is why it is critical to understand how bonds function at a fundamental level.

Bonds are typically issued by governments and corporate entities to raise capital to meet their financial obligations. For example, governments often fund infrastructure projects through various bonds. When the government raises funds in th...