Tuesday, November 22, 2011

How to Lose Money Investing in Bonds - Yahoo! Finance

How to Lose Money Investing in Bonds - Yahoo! Finance:

" Maturity dates and durations are other good tools for assessing the impact rising interest rates will have on the value of your bonds. A bond's maturity is the scheduled date when an issuer stops making interest payments and returns your principal. Duration is a measure of how sensitive a bond's price is to changes in interest rates. It takes several factors into account, including time to maturity and the interest rate. Bonds with shorter maturity periods typically have a lower duration and are less at risk of declining in value than bonds with a longer maturity period."

Sound familiar class??? FYI for others. Here is a Bondpricing spreadsheet we use in class. It is a tad dated, but works for introductory classes and shows Duration.

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