In term of bonds, what two properties impact the percentage movement of the price of a...
In term of bonds, what two properties impact the percentage movement of the price of a bond? Name the 2 properties and describe their relationship and whether the relationship is direct or inverse with bond price movement and why
Homework Answers
The percentage movement of the price of a bond is known as duration of the bond. Two properties that impact the duration of the bond is :
- Yield (current market yield on similar kind of bonds) - Duration of the bond is inversely proportional to the market yield.
- Time to maturity - Duration of the bond is directly proportional to the time to maturity.
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