Why are long term bonds riskier than short term bonds?

2. Duration. The longer the bond, the greater the bond market** growth when long-term interest rates fall.

1. If it is a coupon rate, the longer the term, the risk of interest rate decline can be avoided.

2. If it is a market interest rate.

The duration of long-term bonds is generally greater than that of short-term bonds, and the duration serves as a percentage of yield.

The greater the percentage change, the higher the return from volatility, so the longer the bond has a greater magnitude due to lower yields and a higher yield.

Intuitively, there are many dreams at night, and the longer the time, the greater the uncertainty, so long-term bonds are more risky.

Technically speaking, the duration of long-term bonds is usually relatively large, and the duration is the sensitivity to changes in interest rates, so for the same magnitude of interest rate changes, the ** volatility of long-term bonds is greater, and ** large fluctuations indicate high risk.

At interest rates**, it is better to hold long-term bonds than short-term bonds for the following reasons:

The longer the duration of the bond, the greater the bond market** growth when long-term interest rates fall.

In the case of coupon rates, the longer the maturity, the hedge against the risk of falling interest rates.

If it is the market interest rate, the duration of long-term bonds is generally greater than that of short-term bonds, and the duration is a measure of the percentage change in yield as a percentage of the yield, the larger the higher the return brought by the fluctuation, so the long-term bond is greater due to the decline in yield, and the yield is higher.

The rise in the yield of government bonds means that the country's sovereign credit declines, that is, the country's debt repayment risk increases, or the risk of some high-risk **, commodities** and other investment products decreases, and the return exceeds that of fixed-income bonds, causing investors to sell the country's bonds; The more you sell**, the lower it gets, and the more it will yield! That is, the trade** goes down and the yield goes up.

Just graduated, the senior sister entered the sales department of a ** company, a few years ago, taking advantage of the work, I have indeed been exposed to a lot of varieties, **, **, **, etc., I have made money and lost, it is a small experience, today I will talk to you about the difference between ** and **. As usual, I will share the ** ranking list that I just analyzed some time ago, and welcome to exchange ideas with my senior sister. The latest technical analysis is released.

The difference between ** and **.

It is said as a kind of proof that you have purchased shares in this company; The ** is the contract signed by the two parties to the transaction according to their respective future expectations of the subject matter.

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Now that the concept is clear, let's take a look at these differences:

1. The subject matter.

The subject matter is also the counterparty. Vegetables are of course the subject matter in the vegetable market, in the same way, in the **market, that is**, in the **market, the subject matter is more abundant, bulk products (agricultural and sideline products, metals), financial assets (**, bonds).

2. Investment direction.

The direction of investment, which represents how to make money. The market can only be long to make money, and after the market falls, we have no way to recover it; The market is not like that, the market is a two-way transaction, you can make a profit by going long at a low level, and you can also borrow the underlying asset, and then sell it to get cash, and after a period of time, you can spend cash on the return of the underlying asset to make a profit. But no matter what the direction of investment is, information is definitely the key factor for you to make money, it can be said that as long as you have faster and more reliable information channels than others, you can have a greater probability of making a profit in the market.

Is it possible to understand it in this way, the original assumption is that the risk of national bonds is 1, and the risk of **** is 10, and now the risk of national bonds has risen to 2, but the risk of **** is still 10, and the distance between them has narrowed, so the risk is reduced.

Your problem is the opposite. The rise in Treasury yields indicates that he is struggling to raise funds. So, how can the risk be reduced?

When treasury bonds are issued, they are discounted according to the yield, and the trading is changed according to the laws of the market. The high risk of return is high, the risk of return is low, and the high risk is high and the return is the iron law of the financial market.

You can get to: w---w---w---5---1---y---q---s---c---o---m--- above to see the relevant information, learn more about trading and don't be blind.

You can find the answer to this question in the "Stocks, Tycoons".

Short-term bonds, of course, are long-term risky.

**Sensitivity to interest rates depends on modified duration, modified duration = Macaulay duration divided by 1+r, in your example, assuming that the r of both bonds is the same, so the sensitivity of interest rates depends on Macaulay duration, Macaulay duration and bond maturity are highly correlated, so in most cases, long-term bonds are more sensitive to interest rates.

The longer the time, the longer the term, the definition of the long-burning blind period is the slope of change of the bond....The formula for duration can be summarized as: the sum of all current cash flows multiplied by time, the longer the term, the more items are added, and of course the larger.

Let's say you have a one-year short-term bond and a 20-year long-term bond, and then all of a sudden, interest rates go up. But the coupons of your two bonds will not change with the interest rate, if both bonds** remain unchanged.

So for a one-year bond, you're only being underpaid once (compared to the current market rate), and for a 20-year bond, you're going to be underpaid 20 times ......So the change in one year is less than the change in 20 years. The duration of long-term bonds is greater than that of short-term bonds.

The impact of long-term bonds versus short-term bonds on interest rate risk.

Long-term bonds are more sensitive to interest rate risk than short-term bonds. Long-term bonds have a higher cost-to-return multiplier and can have a large impact on interest rate fluctuations, even if they fluctuate slightly. When interest rates rise, the yield on long-term bonds falls, causing their market value to fall and investors to reap their benefits.

Long-term bonds** move more than short-term bonds due to interest rate risk. Since the impact of the risk of interest rate on long-term bonds is more obvious, investors need to consider the characteristic risks of long-term bonds when choosing bond investment.

Long-term bonds also have a certain amount of liquidity risk in trading. When market interest rates are trending downward, investors are reluctant to hold long-term bonds with higher interest rates and are more willing to buy bonds with lower interest rates. This liquidity risk has less of an impact on short-term bonds because they have a shorter maturity time and do not need to be held for too long, while long-term bonds are more difficult to sell for a profit due to longer maturity times.

Therefore, when investors choose bond investment, they also need Cong Kai to make a reasonable choice according to their own risk tolerance and investment horizon.

As the saying goes, investing is risky. The same applies to the coupon rate of a bond, which measures the investment risk coefficient of a bond. So what is the risk of listed bonds, and the following is a relevant introduction to this for everyone to understand.

1. Interest rate risk: interest rate is one of the important factors affecting bonds, when the interest rate increases, the bond will decrease, and there is a risk at this time. The longer the remaining maturity of the bond, the greater the interest rate risk.

2. Liquidity risk: Illiquid bonds make it impossible for investors to sell bonds at a reasonable rate in the short term, thereby suffering reduced losses or losing new investment opportunities.

3. Credit risk: refers to the loss to bond investors caused by the failure to pay bond interest or repay the principal on time when issuing bonds.

4. Reinvestment risk: If you buy short-term bonds without buying long-term bonds, there will be reinvestment risks. For example, the interest rate on long-term bonds is 14%, and the interest rate on short-term bonds is 13%, and short-term bonds are purchased to reduce interest rate risk.

However, when the short-term bond maturity cash is recovered, if the interest rate is reduced to 10%, it is not easy to find investment opportunities higher than 10%, it is better to invest in long-term bonds in the current period, you can still get a 14% return, in the final analysis, the reinvestment risk is still an interest rate risk.

5. Sexual risk: specific to the bonds with ** terms, because it often has the possibility of mandatory recovery, and this possibility is often when the market interest rate declines and investors charge the actual increase in interest at the nominal interest rate on the surface of the bond.

6. Inflation risk: refers to the risk of declining the purchasing power of money due to inflation. During inflation, the investor's real interest rate should be the coupon rate minus the inflation rate.

If the bond interest rate is 10% and the inflation rate is 8%, the real yield is only 2%, and the purchasing power risk is the most common risk in bond investment. To sum up, the risk of listed bonds is relatively high, after all, the bonds issued by the listed are also "high-risk, high-yield", and the creditworthiness of the bonds issued by them is obviously not as good as the ** bonds. Therefore, investors should be cautious when investing in listed bonds, pay attention to the avoidance of investment risks, and do not get caught up in blind investment.

If you have other aspects, you can consult**, we have a professional answer for you.