标题: Premium bonds highest coupons? from sample test [打印本页] 作者: invic 时间: 2013-4-7 04:22 标题: Premium bonds highest coupons? from sample test
“Holding maturity and yield constant, amortizing bonds selling at a premium would have the highest coupon payments and the highest amount requiring reinvestment; therefore, they have the highest level of reinvestment risk. In the case of par value amortizing bonds, only coupons must be reinvested.”
I understand why high coupons are riskier from reinvestment perspective. But I thought that coupons are paid as stated and premium is a yeild related term…. I’m not quite following the description from CFA sample test question作者: sgupta0827 时间: 2013-4-7 04:25
Thanks rusbus1… I see it in an example..
$1000 3 years YTM10% Zero Sells at 751.31
$1000 3 years YTM10% Par Sells at 1000作者: ikoreaii 时间: 2013-4-7 04:26
Higher coupon means more to invest each period , so if rates go down , you could have greater risk of loss . Low coupon means you got a bigger discount already ( equate to profits) , so less to invest each period , so if rates go down , you have less risk of loss ( most profits made up front )
