[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:05.81,0:00:09.14,Default,,0000,0000,0000,,Duration tells investors the length of time in years
Dialogue: 0,0:00:09.14,0:00:12.13,Default,,0000,0000,0000,,that it will take the bonds cash flows to repay the investor
Dialogue: 0,0:00:12.13,0:00:14.21,Default,,0000,0000,0000,,the price he or she paid for the bond.
Dialogue: 0,0:00:14.21,0:00:17.11,Default,,0000,0000,0000,,A bond duration tells us how much a bonds
Dialogue: 0,0:00:17.11,0:00:18.94,Default,,0000,0000,0000,,price might change when interest rates
Dialogue: 0,0:00:18.94,0:00:21.55,Default,,0000,0000,0000,,change a higher duration number means a
Dialogue: 0,0:00:21.55,0:00:23.26,Default,,0000,0000,0000,,bonds price is more sensitive to
Dialogue: 0,0:00:23.26,0:00:25.36,Default,,0000,0000,0000,,interest rate changes while a lower
Dialogue: 0,0:00:25.36,0:00:27.52,Default,,0000,0000,0000,,duration number means a bonds price is
Dialogue: 0,0:00:27.52,0:00:29.28,Default,,0000,0000,0000,,less sensitive to interest rate changes
Dialogue: 0,0:00:29.28,0:00:32.05,Default,,0000,0000,0000,,this means that the price of a bond with
Dialogue: 0,0:00:32.05,0:00:34.15,Default,,0000,0000,0000,,a duration of five will increase or
Dialogue: 0,0:00:34.15,0:00:36.55,Default,,0000,0000,0000,,decrease by five percent when interest
Dialogue: 0,0:00:36.55,0:00:38.95,Default,,0000,0000,0000,,rates move by one percent a Long's
Dialogue: 0,0:00:38.95,0:00:40.99,Default,,0000,0000,0000,,duration depends on its interest rate
Dialogue: 0,0:00:40.99,0:00:43.96,Default,,0000,0000,0000,,call features yield credit quality and
Dialogue: 0,0:00:43.96,0:00:46.57,Default,,0000,0000,0000,,maturity the shorter the bond term the
Dialogue: 0,0:00:46.57,0:00:49.30,Default,,0000,0000,0000,,lower the duration and vice versa also
Dialogue: 0,0:00:49.30,0:00:51.04,Default,,0000,0000,0000,,the lower the coupon the higher the
Dialogue: 0,0:00:51.04,0:00:54.01,Default,,0000,0000,0000,,duration and vice-versa Christine has a
Dialogue: 0,0:00:54.01,0:00:57.07,Default,,0000,0000,0000,,bond with a 10-year maturity a 0.15
Dialogue: 0,0:00:57.07,0:01:00.28,Default,,0000,0000,0000,,percent yield to maturity a 2.25 percent
Dialogue: 0,0:01:00.28,0:01:03.55,Default,,0000,0000,0000,,annual rate a $1000 par value and
Dialogue: 0,0:01:03.55,0:01:05.95,Default,,0000,0000,0000,,quarterly coupon payments its duration
Dialogue: 0,0:01:05.95,0:01:09.04,Default,,0000,0000,0000,,is nine point one Michael has a similar bond
Dialogue: 0,0:01:09.04,0:01:11.62,Default,,0000,0000,0000,,with a 30-year maturity a zero
Dialogue: 0,0:01:11.62,0:01:13.39,Default,,0000,0000,0000,,point three five percent yield to
Dialogue: 0,0:01:13.39,0:01:16.60,Default,,0000,0000,0000,,maturity a 4.25 percent annual rate a
Dialogue: 0,0:01:16.60,0:01:19.75,Default,,0000,0000,0000,,$1000 par value and quarterly coupon
Dialogue: 0,0:01:19.75,0:01:22.27,Default,,0000,0000,0000,,payments its duration is fifteen point
Dialogue: 0,0:01:22.27,0:01:25.12,Default,,0000,0000,0000,,three two suppose the Federal Reserve
Dialogue: 0,0:01:25.12,0:01:27.19,Default,,0000,0000,0000,,announces changes in its interest rate
Dialogue: 0,0:01:27.19,0:01:29.29,Default,,0000,0000,0000,,policy and interest rates increase
Dialogue: 0,0:01:29.29,0:01:31.87,Default,,0000,0000,0000,,Christine's bond will decrease in value
Dialogue: 0,0:01:31.87,0:01:34.00,Default,,0000,0000,0000,,but Michaels bond will experience a
Dialogue: 0,0:01:34.00,0:01:35.92,Default,,0000,0000,0000,,bigger decrease because of its higher
Dialogue: 0,0:01:35.92,0:01:38.38,Default,,0000,0000,0000,,duration similarly if interest rates were to decrease Michaels bond would
Dialogue: 0,0:01:40.42,0:01:42.79,Default,,0000,0000,0000,,gain more value than christine's again
Dialogue: 0,0:01:42.79,0:01:45.16,Default,,0000,0000,0000,,because of its higher duration duration
Dialogue: 0,0:01:45.16,0:01:47.08,Default,,0000,0000,0000,,is just one factor that affects a Bloods value inflation risk default risk and
Dialogue: 0,0:01:52.15,0:01:54.31,Default,,0000,0000,0000,,call risk are also important but duration tells investors like Christine
Dialogue: 0,0:01:54.31,0:01:56.62,Default,,0000,0000,0000,,and Michael how much risk they face from interest rate changes.