Sorry I am still confused. What is the impact of interest rates on my debt mutual funds returns??
@ayyappanl7 ай бұрын
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@naveedh279 ай бұрын
Why is long term bond more volatile than short term bond during interest rate change?
@sathvikraomp20068 ай бұрын
Because a short term bond by its definiton is for a short duration.So no one will a pay a huge premium for a bond that will mature in near future. Even if it has high yield than current rates. Whereas for a long term bond one can enjoy high yields for longer duration . So people will be willing to pay extra premium. The same logic applies in reverse when interest rates rise.
@naveedh278 ай бұрын
@@sathvikraomp2006 so when interest rate goes down, will NAV and ytm of short term bond go down?
@sathvikraomp20068 ай бұрын
@@naveedh27 yes but shorter the length of bond less sensitive it is to change