Bond Question

LOL, thanks man, I like to apply what i've been studying in another forum (no pun), is all.
 
CFAHouston Wrote:
-------------------------------------------------------
> James - That's what we all thought. However, this
> original question is referring to zero coupon
> bond.
>
> I did a search online, and it said that zero
> coupon bond duration = maturity time.
>
> I still don't get the concept of how different
> yeild zero bond with same maturity can have the
> same duration, but that's how zero coupon duation
> works.
>
> My logic was that even with non-zero bond, change
> in duration effects price, not coupon payments,
> then why zero coupon bond with different yeild can
> have same duration if thier maturity is equal.
>
> :(

The searches online are mostly pointing to the "old" definition of duration, which is based on Macaulay, not effective. The Macaulay duration, according to Schweser, is a less accurate interpretation of interest-rate risk than the effective duration.

Therefore, I think we should ignore what the other websites are saying, and go with the effective duration based conclusion that lower yield (coupon or no coupon) will result in higher duration.
 
You know, at this point, that sounds good!

So, as I said on pg 1..lower coupon, higher duation.

:)
 
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