Q: the implication of both cyclical and secular changes in the primary corporate bond market for fixed income portfolio management is that effecitve duration and aggregate interest rate risk will increase. True or False? Thanks
I thought that yields decline as a result of cyclical changes – since as new bond issues increase, they provide price confirmation and result in decreased rates. So i’d say no. but not sure.
Cyclical: false, for the reasons listed above. (Assuming the ever-increasing supply). Secular: to me not so straightforward with respect to duration. If to base on the relaive scarcity of long-term bonds and willingness to purchase them, then, at the end of the day, probably, true.
anyone else?
aggregate interest risk is increasing, due to volatility of interest rates, and as effect volatility of bond returns. not sure about increase of duration, I would still say that duration of bonds does not increase as a trend rather decreases.
Answer is False. Due to secular changes on bond market there are more MTN notes being issued, than long term bonds. This will decrease the duration which also decreases interest rate risk. Its also helps longer term bonds trade at premium is a PM is trying to match durations for long term liabilities.
what SS is it??
Due to secular changes on bond market, bullets dominate the corporate bond market , do bullets tend to more interest rate sensitive?
duration is definitely decreasing, so false.