Hi all!
This is probably a dumb question, so bear with me.
So, I know that according to the yield curve, as the time to maturity increases, as does the yield to maturity.
However, I also know that an increase in the interest rate causes a decrease in the present value of a bond over longer time horizons.
What would be the purpose, then, to invest in long-term loans if the present value will just be lower? Doesn't the yield = interest rate? If it's higher, wouldn't that be a bad thing, not a good thing? Why are higher yields more "attractive" for long-term bonds?
Thanks!
Submitted October 22, 2019 at 09:22PM by yogurtcrotch https://ift.tt/2N0RM9o
