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Interest Rate Risk

Can someone explain in simple terms why the coupon rate and YTM are inversely related to interest rate risk? (One goes up, the other goes down).

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You should try to search for this one; there are a bazillion threads on this, as it gets asked multiple times every year.

While you’re doing that, think about the effect of coupon rate and YTM on Macaulay duration; as Macaulay duration goes, so goes modified duration (and, therefore, interest rate risk).

Simplify the complicated side; don't complify the simplicated side.

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