Darragh Kelly
Ton up Member
Hi,
On page 13 of chapter 11, a question covers the relative liquidity of short term and long term government bonds.
So long term bond prices are obviouslty more volatile then short term, because in the long term much more can happen in the economy which could influence the supply and demand for long term bonds? So we'd expect alot of price changes hence volatility?
So then how are short-dated bonds more liquid if they are less volatile? I get they'd be more liquid because of the short term commitments ie you're not locked in for a long duration so easier to sell the bond vs long term.
Thanks,
Darragh
On page 13 of chapter 11, a question covers the relative liquidity of short term and long term government bonds.
So long term bond prices are obviouslty more volatile then short term, because in the long term much more can happen in the economy which could influence the supply and demand for long term bonds? So we'd expect alot of price changes hence volatility?
So then how are short-dated bonds more liquid if they are less volatile? I get they'd be more liquid because of the short term commitments ie you're not locked in for a long duration so easier to sell the bond vs long term.
Thanks,
Darragh