
Higher Bond Nominal Return  > Higher Duration.

Higher (lower) market yield means lower (higher) duration.
Does the first statement stand? If so, does it conflict with the second one?
Thank you!
Higher Bond Nominal Return  > Higher Duration.
Higher (lower) market yield means lower (higher) duration.
Does the first statement stand? If so, does it conflict with the second one?
Thank you!
If by nominal return you mean coupon rate then the first statement is incorrect; a higher coupon rate results in a lower duration.
The second statement would be correct. If market yields are high a percent change in yields will not change the bond price much, which is the definition of low duration.
Thanks, krokodilizm!
I was looking at the Breakeven analysis example in Kaplan book. Where they show the foreign bond nominal return is 5.25%, duration is 6.3 While the domestic bond nominal return is 4.75 and the duration is 4.5%.
That is why I am wondering which yield are they talking about? Based on the second statement, the higher market yield, the lower duration. But here, the higher yield, higher duration…
Do the bonds have the same maturity? The same YTM?
Thanks, S2000! I forgot that they can have different maturiry…
Just want to confirm, the yield they mentioned (5.25% and 4.75%), those are YTM (market yield), right? I think I am forgetting some basics so just want to double check.