How do you measure the effects of increasing/decreasing effective duration on spreads?
For example, if I increase duration by 1, how does that affect spread changes?
anyone?
There’s no reason (of which I’m aware) that a change in duration should, by itself, cause any change to spreads.
Thanks, just curious why? Wouldn’t longer duration make the bond more risky thereby increasing spread?
Just reminiscing on the beginning of my CFA journey. This was one of my earlier posts. Hang in there everyone.
I apologize for not replying earlier to your second post.
My first question would be this: how are you planning to change the effective duration of a given bond?
When I saw the title of this thread, my first thought was that I can’t think of a reason that a change in effective duration would lead to a spread change.
Plus ça change, plus c’est la même chose.