Duration Risk: an Under-Appreciated Problem for Tesla
Tesla and other unicorn valuations are highly sensitive to changing interest rates
Jan 9, 2020 · 9 min read
A quick primer on duration risk
In fixed-income parlance, “duration risk” is the risk associated with the sensitivity of the bond’s price to changes in interest rates. Owning a bond is a claim on future cashflows from the debtor: typically the investor receives regular payments — coupons — and the face value of bond when the debt expires — principal. The…
