Query Detail : RBI Grade B Phase II
In a falling interest rate scenario, other things remaining same, a bond with higher maturity is better than a bond with lower maturity
Kindly explain this
Mandeep Singh, April 2nd 2020,
RBI Grade B Phase II
for this refer to the concept of duration of a bond. the higher the duration (which is higher for higher maturity) the higher will be the impact on the price of the bond. so in case of falling interest rates, the price of the bond will rise faster for a higher maturity bond (as price and interest rates or yield are inversely related).