Re:Why America will soon see a wave of bank mergers
by seanhunter on Tuesday May 02, 2023 @04:24PM
(#35793638)
The answer to your question is prices would go down until the yield on the bonds equals the market rate.
Separate nerd note: I think you mean maturity not duration.
The maturity of a bond is the point in the future when holders get back the principal.
The duration of a bond is pretty much the first derivative of price with respect to rates expressed in years. Intuitively it's the number of years (on average) an investor in that bond would need to remain invested for the future value of cashflows from the bond to be equal to their investment in the bond.
Separate nerd note: I think you mean maturity not duration.
The maturity of a bond is the point in the future when holders get back the principal.
The duration of a bond is pretty much the first derivative of price with respect to rates expressed in years. Intuitively it's the number of years (on average) an investor in that bond would need to remain invested for the future value of cashflows from the bond to be equal to their investment in the bond.
https://www.investopedia.com/terms/m/macaulayduration.asp