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Explain intuitively why bonds with longer maturities are more sensitive to changes in interest rates?

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Finance

Explain intuitively why bondswith longer maturities are more sensitive to changes in interestrates?

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4.5 Ratings (839 Votes)
Bond price is output of present value of future cash flows The cash flows of the bonds are discounted by the yield or interest rate depending on tenor As cash flows are discounted for the overall tenor of the bond higher the bond term more the discounting opportunity and this makes long term bond sensitive to    See Answer
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