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9 Cards in this Set
- Front
- Back
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Return = initial yield means.. |
when time equals maturity equals holding periods |
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Interest going up = periods going down means.. |
capital loss when time until maturity is longer than holding period |
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A more distant maturity date means.. |
lower rate of return from interest rate |
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Even with a big interest rate means.. |
return can be negative if interest rates rise |
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What happens when interest rates go up? |
It means poor investment happens because price falls, capital loss |
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There is no interest rate risk when.. |
time to maturity equals holding period |
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Interest rate risk means |
Interest rate increases, bond principle falls, lose gain. Consol bonds most exposed |
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Inflation of risk means |
purchase power of coupon rate lowers because of inflation |
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Real interest rate formula |
Nominal interest rate - expected inflation |
