Jul 07

Effect of maturity on bond price – 7 min screencast

by David Harper, CFA, FRM, CIPM

FRM |

A brief screencast to examine a tricky AIM (learning objective) from Tuckman: "Discuss the effect maturity has on the price of a bond." Answer:

  • Bond price increases with maturity whenever the coupon rate exceeds the forward rate over the period of maturity extension. Price decreases as maturity increases whenever the coupon rate is less than the relevant forward rate.

Screencast:

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