Sunday, June 05, 2005

Long bonds

From here to eternity
They found that it made sense to buy long bonds in almost all interest-rate scenarios but one: when rates are low (so the risk that they will revert to the mean, thus undercutting the value of the bond, is high) and the yield curve—a line drawn through the interest rates on government securities with different maturities—is flat (so there is little extra reward for taking that risk).
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