PPT Slide
What is interest rate (price) risk? Does a 1-yr or 10-yr 10% bond have more price risk?
Price risk: Rising kd causes bond’s price to fall.
kd 1-year Change 10-year Change
5% $1,048 $1,386
10% 1,000 4.8% 1,000 38.6%
15% 956 4.4% 749 25.1%
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