can anyone help me
why would sinking fund outperform callables and bullets when interest rate rise & undperform bullets when interest rates declines ?!
can anyone help me
why would sinking fund outperform callables and bullets when interest rate rise & undperform bullets when interest rates declines ?!
Because sinking funds require pre-determined payment of principal that’s laid out on a schedule unlike conventional bonds where it is all paid out at the end. Therefore, there is less impact on bond value (since portions of the principal is already paid out) when interest rates moves.
thnx a lot