Break-Even Price

Glossary

Banking

Break-Even Price

In bond markets, the break-even is the time it takes for cash flows on a bond to match the initial investment. In inflation-linked bonds, break-even is a core factor: it is the difference (assuming matched maturity and credit quality) between the nominal yield on a bond and the real yield on an inflation-linked bond. A bondholder is better off if average inflation is higher than the break-even.

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