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The strategy of riding the yield curve is one in which a bond trader…

November 14, 2016

…attempts to generate a total return over a given investment horizon that exceeds the return of a bond with maturity matched to the horizon. The strategy involves buying a bond with maturity more distant then the investment horizon. Assuming an upward sloping yield curve, if the curve does not change shape or level as the bond approaches maturity (rolls down the yield curve) it will be priced lower, and if held to less than maturity it should generate higher returns.


From → Asset Valuation

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