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Interest is not a derivative of a debt instrument such as an obligation. The most common example quoted is slowing the rise of the rate of increase in inflatio
by AlDante2 4y ago
Interest is not a derivative of a debt instrument such as an obligation.
The most common example quoted is slowing the rise of the rate of increase in inflation. Inflation is change in price, i.e. first derivative.
- soonerroadie 4y agoSimilarly, finance people don’t consider interest rates/yields to be derivatives. So, on a bond “duration” is the first derivative of price with respect to yield, and “convexity” is the second derivative.