返回列表 发帖

what does market dirctional mean?

Prepayment risk is the cause of the negative convexity, which means the mortgage security loses more from a given increase in yield than it gains from a corresponding decrease in yield.

This is why an unhedged mortgage security is called a market directional investment.
==============================================================



In the above contents in Schweser explaning fixed income, I would like to know what the market directional means.
As read the forum I saw the word and I realized I don't know the meaning.

when R increases : large loss in value
when R decreases : small gain in value
(in negative convexity)

I could understand the concept but how this is related with the word market directional?

返回列表