My pal Joe told me that the value of outstanding bonds changes whenever the going rate of interest changes. He expanded on his comments by saying that short-term interest rates are more volatile than long-term interest rates. Therefore short-term bond prices are more sensitive to interest rates than long-term bond prices.
Is Joe right?© BrainMass Inc. brainmass.com June 4, 2020, 12:58 am ad1c9bdddf
Joe is right about the first point but wrong about the conclusion. Bond prices reflect the present value of a ...
The solution analyses the truth of the claim that the value of outstanding bonds change whenever the going rate of interest does and that short-term interest rates are more volatile than long-term ones. 78 words.