Can anyone explain how lower YTM on a bond increases the duration / sensitivity to change interest rates & Please explain the meaning of credit cycle in credit analysis chapter ?
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At lower yields, the principal return at maturity makes up a larger proportion of the cash flows. Since it occurs at the end of all the cash flows, it lengthens the overall weighted time at which the cash flows occur, lengthening duration.
Please refer to core reading it is explained beautifully there…