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  • Interest Rates Sale Price Total Return Investment Horizon Future Value of Reinvested Coupon Lower Investment Horizon

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    vishal kanekar
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    This document shows the future value and total return of investments over different time horizons (5, 7, and 9 years) and interest rates (9.4%, 10.4%, 11.4%, and 12.4%). Higher interest rates lead to lower future values but higher reinvested coupon amounts, while longer time horizons increase future value through compounding but increase risk exposure.

    Original Description:

    Explaining the changes in duration gap and investment horizon

    Original Title

    Duration GAP Explained

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    This document shows the future value and total return of investments over different time horizons (5, 7, and 9 years) and interest rates (9.4%, 10.4%, 11.4%, and 12.4%). Higher interest rates lead to lower future values but higher reinvested coupon amounts, while longer time horizons increase future value through compounding but increase risk exposure.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views2 pages

    Interest Rates Sale Price Total Return Investment Horizon Future Value of Reinvested Coupon Lower Investment Horizon

    Uploaded by

    vishal kanekar
    This document shows the future value and total return of investments over different time horizons (5, 7, and 9 years) and interest rates (9.4%, 10.4%, 11.4%, and 12.4%). Higher interest rates lead to lower future values but higher reinvested coupon amounts, while longer time horizons increase future value through compounding but increase risk exposure.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Future Value of

    Investment Interest Rates reinvested sale price Total Return


    Horizon coupon
    5 9.4 48 95 143
    Lower 5 10.4 49 91 140
    Investment
    Horizon 5 11.4 50 88 138
    5 12.4 51 84 136

    7 9.4 75 96 171
    Macaulay
    Duration 7 10.4 77 94 171
    7 11.4 79 92 171

    9 9.4 106 99 205


    Higher 9 10.4 110 98 208
    Investment
    Horizon 9 11.4 115 97 212
    9 12.4 120 96 216
    Horizon yield

    7.61
    7.32 Risk to higher
    7.05 rates
    6.80

    10.41
    Hedged
    10.40 against risk
    10.41

    13.28
    13.57 Risk to lower
    13.87 rates
    14.18

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