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Malkiel's theorems summarize the relationship between bond prices, yields, coupons, and maturity. Malkiel's Theorems paraphrased (see text for exact wording); all theorems are ceteris paribus:

· Bond prices move inversely with interest rates.

· The longer the maturity of a bond, the more sensitive is its price to a change in interest rates.

· The price sensitivity of any bond increases with its maturity, but the increase occurs at a decreasing rate.

· The lower the coupon rate on a bond, the more sensitive is its price to a change in interest rates.

· For a given bond, the volatility of a bond is not symmetrical, i.e., a decrease in interest rates raises bond prices more than a corresponding increase in interest rates lower prices.

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