Question: explain why if interest rates increase after a bond issue, the bonds price will decline and the yield to maturity will increase. Explain how the
explain why if interest rates increase after a bond issue, the bonds price will decline and the yield to maturity will increase. Explain how the time to maturity impacts the extent to which interest rate changes impact the bonds price.
Additionally, assume that you have a short investment horizon (less than 1 year). You are considering two investments: a 1-year Treasury security and a 20-year Treasury security. Explain why the longer-term Treasury security would be considered riskier than the shorter-term Treasury security.
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