Question: Under the no arbitrage condition, when T increases, does the discount factor Z(0,T) necessarily increase or decrease? Why? When T increases, does the yield r(0,T)

Under the no arbitrage condition, when T increases, does the discount factor Z(0,T) necessarily increase or decrease? Why? When T increases, does the yield r(0,T) necessarily increase or decrease? Why? Please try to explain in detail.

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Under the noarbitrage condition the relationship between the discount factor Z0T and the yield r0T as the time to maturity T increases is as follows 1 ... View full answer

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