Rolldown Return and Pull to the Par

CFA Level III
#1

Probably a stupid question, but what’s the difference between rolldown return and pull to the par?
I mean aren’t all the bonds pulling the par and generating the rolldown return?

#2

Pull to par assumes that the bond’s YTM remains unchanged.

Rolldown return assumes that the yield curve remains unchanged; if the yield curve is not flat, then the new YTM on the bond will be different than the old YTM after some time has passed.

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#3

Rolldown return assumes unchanged yield curve.

Pulled to par= not return per say. Just characteristic of premium or discount bond. I mean at the end you will only get principal irrespective of price you bought.

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#4

so they are not the same thing? I mean if they are being pulled to par regardless, doesn’t it mean we are rolling down to get to the par?

#5

Correct.

#6

I think Pull to par return → just change N in the calculator; Rolldown return → change both N and I/Y.
Is this right?
Thanks!

#7

Yes.