If Long Term Bonds Are So Risky, Why Would Anyone Purchase Them
If all other factors are equal, long term bonds have higher coupons than shorter term bonds of the same credit quality.
You might want to purchase long term bonds for other reasons. One would be to "lock in" an attractive interest rate for as long as possible, if you think you are not going to sell bonds before they mature.
Also, if you think interest rates are about the decline, buying bonds at the long end positions you for maximum capital gains. That would imply that you consider potential capital gains as important than interest yield, an in all likelihood that you intend to sell the bonds before they mature.
Currently UK has a probability of further interest rate cut, especially in 2017.
Source: The Bond Book by Annette Thau
You might want to purchase long term bonds for other reasons. One would be to "lock in" an attractive interest rate for as long as possible, if you think you are not going to sell bonds before they mature.
Also, if you think interest rates are about the decline, buying bonds at the long end positions you for maximum capital gains. That would imply that you consider potential capital gains as important than interest yield, an in all likelihood that you intend to sell the bonds before they mature.
Currently UK has a probability of further interest rate cut, especially in 2017.
Source: The Bond Book by Annette Thau
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