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What is Rolling Down the Yield Curve Strategy about?

This investment strategy of "rolling down the yield curve" can be profitable for two reasons: 1) longer-term bonds pay higher interest than shorter-term bonds, and 2) longer-term bonds will rise in value over time as they near maturity. However, if overall market interest rates increase, this strategy risks losses, as longer-term bonds will decline more in value than shorter-term bonds in a rising rate environment. This strategy can work well with corporate bonds due to their wider yield spreads compared to

Author

amitva2007

Language

EN