首页why The longer the maturity of a bond and the lower the coupon, the greater the sensitivity of the bond's price to interest rate changes.

why The longer the maturity of a bond and the lower the coupon, the greater the sensitivity of the bond's price to interest rate changes.

时间: 2024-05-26 07:17:34 浏览: 95

Comparison of ratings by mothers and teachers on preschool children using the vineland social maturity scale

Comparison of ratings by mothers and teachers on preschool children using the vineland social maturity scale Validi ty of the Otis-Lennon 27 O-LMAT be used as a substitute for the WISC with mental retardates only when the probable error of estimate is known and taken into consideration for the sample to whom the test is administered. Since the O-LMAT is a group intelligence test which requires the subject to read and the WISC is an individually administered test requiring the ability

The sensitivity of a bond's price to changes in interest rates is measured by its duration, which is a function of the bond's maturity and coupon rate. When a bond has a longer maturity, its duration is greater, meaning that its price is more sensitive to interest rate changes. This is because as interest rates rise, the future cash flows from the bond are discounted at a higher rate, resulting in a lower present value of the cash flows and a lower bond price. Similarly, when interest rates fall, the future cash flows are discounted at a lower rate, resulting in a higher present value of the cash flows and a higher bond price. In addition, when a bond has a lower coupon, it means that the bond's future cash flows are further into the future. This makes the bond more sensitive to interest rate changes because the present value of future cash flows is more affected by changes in interest rates when those cash flows are further into the future. Therefore, the combination of a longer maturity and a lower coupon results in a greater sensitivity of the bond's price to interest rate changes.

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