Compare two government bonds with same maturities but different yields and coupons. UK bonds have lower yields and higher coupons than US bonds. Which of the following is MOST accurate for UK bonds in relation to US bonds. duration, yield volatility a) high, high b) low, low c) low, high d) high, low e) can not be determined, can not be determined
Just posted in the other thread, but I’m saying E) cannot determine. need to know the actual values of the ytm and cpn to do a comparison of durations… can be sure which value will have the strong impact. Any you’ll need to know maturity as a result.
e lower yield = higher duration higher coupon = lower duration
Hey, Why is it that higher coupon leads to lower duration?
a bond with a higher coupon has less of a percentage change in yield (given an increase in interest rates) then a bond with the exact same details except a lower coupon
what was the answer here? D?
i say d
actually, cant be d cuz higher coupon = lower duration
getterdone Wrote: ------------------------------------------------------- > a bond with a higher coupon has less of a > percentage change in yield (given an increase in > interest rates) then a bond with the exact same > details except a lower coupon ok, one more thing I ingnored thanks
higher coupon = lower duration lower yield = higher yield volatility…this part im iffy on anyone with a legit answer?
everyone gets this stuff wrong atleast once, what a great question. hehe
higher coupon = lower duration lower yield = greater price/yield volatility legit answer = c!
saurya - explain, thanks.
My take- duration is first derivative of the P-Y curve- Uk bond is premium, so will have higher slope, hence high duration. Now for every change in price, it will show less yield change, hence D
not a chance.
im looking at that curve, and your way overthinking this. find a page or sample Q that shows that. i just got a very similar q in the q bank and thats where i pulled my answer from…cant find the q now. gotta be c.