Effect of time to maturity on sub bonds

[Nicole Seaman]

Can someone explains how increase in firm volatility makes it more likely that SD will be paid off and thus increasing its value?

Also, how senior debt falls in value when firm volatility increases?

@mville

I moved your post to this thread that already discusses these concepts. I did a search in the forum, and I believe that the discussion in this thread should help to answer your question. The forum's search and tag functions are very useful and will generally bring up many threads that already exist.

Thank you,

Nicole