VAR

anbu.edu
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VAR

Postby anbu.edu » Tue Oct 15, 2013 1:31 pm

Does Increase in RF increase yield of the corporate bond?.. If so why?

pradeeppdy
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VAR

Postby pradeeppdy » Wed Oct 16, 2013 4:36 am

Yes because here the relationship is, (1 + nominal rate) = (1 + real interest rate) (1 + inflation rate).
If it so when RF rate increases means nominal rate also increase and through this the bond price will go down and yield increase up.
Formula to calculate bond yield is Coupon rate/Bond price.

anbu.edu
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Postby anbu.edu » Wed Oct 16, 2013 5:38 am

Thanks


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