When maturity increses why Macaulay duration increses in case of only par & premium bonds not discount bonds???
Pls explain it
What makes you think that it doesn’t increase for discount bonds?
Obviously it’s increses but “for a given coupon rate, Macaulay duration can be lower for a long-term discount bond than a short-term discount bond.”
Pls explain this statement, I want logic behind this statement
Higher discount rate.
How, pls elaborate, I don’t understand your logic
A 10-year bond can have a higher YTM than, say, a 5-year bond. If the YTM is sufficiently higher, the Macaulay duration would be lower.
Set up a couple of bonds in Excel and play with different YTMs. You’ll see.
Okay thanks, definitely l will see
Please let me know how it goes.