Fixed income instrument

chandniwadhwani92
Finance Junkie
Posts: 166
Joined: Mon Oct 06, 2014 7:36 am

Fixed income instrument

Postby chandniwadhwani92 » Sun Dec 21, 2014 9:40 am

TERM STRUCTURE OF YIELD VOLATILITY
SOURCE OF QUESTION- SCHWESER BOOK 5 FIXED INCOME RISK AND RETURN PAGE 96
It could b the case the shorter term bonds has more price volatility than a longer term bonds with a greater duration because of greater yield volatility of shorter term bonds
What does this sentence means because of greater yield volatility of shorter tern yield

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Fixed income instrument

Postby edupristine » Thu Jan 29, 2015 10:01 am

Hi, as we know that short term bond have greater duration than long term bond therefore short term bonds have more price volatility than long term bonds. duration is the interest rate risk. since interest rate risk is higher for short term bonds we conclude that short term bonds have more price volatility.


Return to “CFA Level I”



cron

Disclaimer

Global Association of Risk Professionals, Inc. (GARP®) does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine for FRM® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP® is not responsible for any fees or costs paid by the user to EduPristine nor is GARP® responsible for any fees or costs of any person or entity providing any services to EduPristine Study Program. FRM®, GARP® and Global Association of Risk Professionals®, are trademarks owned by the Global Association of Risk Professionals, Inc

CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by EduPristine. CFA Institute, CFA®, Claritas® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Utmost care has been taken to ensure that there is no copyright violation or infringement in any of our content. Still, in case you feel that there is any copyright violation of any kind please send a mail to abuse@edupristine.com and we will rectify it.