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higher duration

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › higher duration

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by AvatarJohn Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • March 2, 2021 at 9:38 am #612567
    AvatarJiya024
    Member
    • Topics: 168
    • Replies: 56
    • ☆☆☆

    ” However, the greater risk attached to the longer dated bond is consistent with the spot yield and credit spreads information provided, which shows that the yield curve is upward sloping i.e. yields are higher on longer dated bonds in a particular risk class.”

    how does upward sloping yield curve increases the riskiness of a bond and justify its higher duration sir?

    March 2, 2021 at 9:59 am #612590
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    But I explain this in my lectures!!!

    It is not that an upward sloping yield curse increases the riskiness – it is the other way round!!

    The more the risk the higher the investors required rate of return.

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  • The topic ‘higher duration’ is closed to new replies.

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