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  2. Bond convexity - Wikipedia

    en.wikipedia.org/wiki/Bond_convexity

    As interest rates change, the price is not likely to change linearly, but instead it would change over some curved function of interest rates. The more curved the price function of the bond is, the more inaccurate duration is as a measure of the interest rate sensitivity. [2] Convexity is a measure of the curvature or 2nd derivative of how the ...

  3. Yield curve - Wikipedia

    en.wikipedia.org/wiki/Yield_curve

    But almost always, the long maturity's rate will change much less, flattening the yield curve. The greater change in rates at the short end will offset to some extent the advantage provided by the shorter bond's lower duration. Long duration bonds tend to be mean reverting, meaning that they readily gravitate to a long-run average.

  4. The Relationship Between Bond Prices and Interest Rates - AOL

    www.aol.com/finance/relationship-between-bond...

    Bond prices and interest rates are closely related and can both be used to forecast economic activity, so investors should at least be aware of the basics: how interest rates affect bond prices ...

  5. Inverted yield curve - Wikipedia

    en.wikipedia.org/wiki/Inverted_yield_curve

    An inverted yield curve is an unusual phenomenon; bonds with shorter maturities generally provide lower yields than longer term bonds. [2] [3] To determine whether the yield curve is inverted, it is a common practice to compare the yield on the 10-year U.S. Treasury bond to either a 2-year Treasury note or a 3-month Treasury bill. If the 10 ...

  6. Bond Yield vs. Interest Rate: What Investors Need to Know - AOL

    www.aol.com/finance/bond-yield-vs-interest-rate...

    Yield and interest are highly-related when it comes to bonds. Your yield is based on the interest payments generated by a bond. However, because yield is the total profit you make based on your ...

  7. Duration (finance) - Wikipedia

    en.wikipedia.org/wiki/Duration_(finance)

    As interest rates change, the price does not change linearly, but rather is a convex function of interest rates. Convexity is a measure of the curvature of how the price of a bond changes as the interest rate changes. Specifically, duration can be formulated as the first derivative of the price function of the bond with respect to the interest ...

  8. Yield to maturity - Wikipedia

    en.wikipedia.org/wiki/Yield_to_maturity

    The annual bond coupon should increase from $5 to $5.56 but the coupon can't change as only the bond price can change. So the bond is priced approximately at $100 - $0.56 or $99.44 . If the bond is held until maturity, the bond will pay $5 as interest and $100 par value for the matured bond.

  9. Yield (finance) - Wikipedia

    en.wikipedia.org/wiki/Yield_(finance)

    The current yield is the ratio of the annual interest (coupon) payment and the bond's market price. [4] [5] The yield to maturity is an estimate of the total rate of return anticipated to be earned by an investor who buys a bond at a given market price, holds it to maturity, and receives all interest payments and the payment of par value on ...