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Is the price of a long-term (longer-maturity) bond more or less sensitive to changes in interest rates than that of a short-term bond? Why?
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- Is the price of a long term bond or the price of a short term security more sensitive to a change in interest rates? Why?What is the relationship between interest rate level and bond price? Why must this relationship be true? How has the current rate environment impacted the prices of bonds?How is a bond’s duration impacted by varying the coupon rate? How is a bond’s duration impacted by varying the time to maturity? What implications would these impacts have for a bond investor if interest rates change?
- What happens to the price of a bond when interest rates change?If interest rates in the financial markets increase after a bond is issued, what will happen to the bond's price and to its yield to maturity? Does the length of time to maturity affect the extent to which a given change in interest rates will affect the bond's price?What is the link between the level of interest rates and the price of bonds? Why does this connection have to be true? How has the present interest rate environment affected bond prices?
- 1. How do we determine the present value of a bond when market rate differs from its contract rate?What is the relationship between the PV and the market interest rate? Does a lower market rate impact the price of the bond? Why?Should the rate of return of a call option on a long-term Treasury bond be more or less sensitive to changes in interest rates than is the rate of return of the underlying bond?
- Why is the yield of bonds with credit risk higher than that of otherwise identical default-free bonds?When it comes to bond values, what role do interest rates play? How can you value a bond if you don't know what the fundamental assumptions are.why modified duration is a better measure than maturity when calculatinga bond’s sensitivity to changes in interest rates.