bond prices and characterstics
in fixed income book Exhibit 1 page 408
the maturity effect: says that bonds with same coupon rates and different maturities the longer will have the greater price change percentage.
but there’s an exception when the bond is trading at discount. and this illustrated in the results for Bonds D and G (in the same Exhibit), whereas the D has the greatest price change despite it have a shorter-term.
until here everything is logical.
so why the bond A have a lower price change than D, and it have a more even shorter-term?
or in other words: what determines the bond that will have the more price change percentage if all bonds are trading at discount same as A, D, and G bonds?
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