Duration Question (non-CFA related)
what is the effect of increased rates on the duration of a fixed-rate bond? Or a fixed rate MBS.
I feel like for an MBS product if rates decreased it would decrease duration because more people would refinance their loans and since duration is a weighted-average of the life of the security it would decrease the time it took to pay-back the loan.
But if rates increased, it would have minimal impact on duration?
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