My question: Why would a 15-year T Bond have an interest of 16% and a 20-year Bond have a lower rate of 15%. Wouldn't a longer period carry a higher rate? Moreover a 4- or 5-year Bond carry an interest of about 14%, almost equal to the rate of a 20-year Bond. Why is that, how are rates determined? Would a 5-year Bond carrying 14% be better to take than a 20-year Bond that carries a 15% rate? What do I need to know as a potential investor? Thank you for your clarification.
Hi Alex,
Thank you for sharing knowledge with us.
My question: Why would a 15-year T Bond have an interest of 16% and a 20-year Bond have a lower rate of 15%. Wouldn't a longer period carry a higher rate? Moreover a 4- or 5-year Bond carry an interest of about 14%, almost equal to the rate of a 20-year Bond. Why is that, how are rates determined? Would a 5-year Bond carrying 14% be better to take than a 20-year Bond that carries a 15% rate? What do I need to know as a potential investor? Thank you for your clarification.