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Definition of 'Roll-Down Return'
A form of return that arises when the value of a bond converges to par as maturity is approached. The size of the roll-down return varies greatly between long and short-dated bonds. Roll-down is smaller for long-dated bonds that are trading away from par compared to bonds that are short-dated.
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Investopedia explains 'Roll-Down Return'
Roll-down return works two ways in respect to bonds. The direction depends on if the bond is trading at a premium or at a discount. If the bond is trading at a discount the roll-down effect will be positive. This means the roll-down will pull the price up towards par. If the bond is trading at a premium the opposite will occur. The roll-down return will be negative and pull the price of the bond down back to par.
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Search results for 'Roll-Down Return'
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http://www.investopedia.com/articles/optioninvestor/05/030105.asp
... options, but this only increases risk should IBM keep falling or never return to
the ... which can perhaps be combined with the one above) is to roll down into a ...
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http://www.investopedia.com/articles/optioninvestor/05/051005.asp
... commissions). A discount commission per round turn might be about $15 for
each leg. Not too shabby a return for a month. This is ...
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