Bonds mod 2 case
3 pages (750 words)
For bonds 1 and 3, we have normal upward sloping yield curves, whereas, for bonds 2 and 4, we have downward sloping yield curves. (Yield Curve - Wikipedia, inverted Yield Curve )
From the results, it can be inferred that under normal circumstances and for normal bonds, the yield increases as the maturity period increases, so, if an investor is holding the bond for longer time, then, he/she will have greater yield as compared to an investor who holds the bond for shorter period.