Is the term structure the only factor influencing the price of a bond?
No. There are other factors, besides the term structure, that influence the pricing of a bond. These include, for instance, tax regulations (differential tax rates for income and capital gains) that affect the relative valuations of bonds with different cash flows. Further, illiquid bonds trade at a premium relative to liquid bonds of the same residual maturity. Other bond characteristics also influence valuation. For trades in the same bond conducted on the same day, dispersion in prices could be attributed to transaction costs that vary with the size of the trade, an intra-day effect on account of new developments during the day and expectations about the directionality of the term structure being an example.
No. There are other factors, besides the term structure, that influence the pricing of a bond. These include, for instance, tax regulations (differential tax rates for income and capital gains) that affect the relative valuations of bonds with different cash flows. Further, illiquid bonds trade at a premium relative to liquid bonds of the same residual maturity. Other bond characteristics also influence valuation. For trades in the same bond conducted on the same day, dispersion in prices could be attributed to transaction costs that vary with the size of the trade, an example of which could be an intra-day effect on account of new developments during the day and expectations about the directionality of the term structure.
