Home     About Us    Contact Us     Contribute     Privacy
Mutual Funds
Related Articles
Related Definitions
Related Categories
Tip of the Day

Tip of the Day Refinance Your Mortgage if You Can Cut At Least One Point

Refinance Your Mortgage if You Can Cut At Least One Point - Refinancing a mortgage only makes good sense if you are going to save more than 1% on the...

read entire tip

Recently Added
Other Great Sites

Bond Duration

Bond duration is a term that would appear to refer to the length of time it takes for the bond to mature, and at least in part, it is but this is also one area were the more complex aspects of owning bonds is found.

Duration is actually part of the bond's asset, and refers to measuring the sensitivity of the asset's price to changes in interest rates. The length of time the bond takes to be repaid is one of the factors involved in computing the bond duration, but from that point definitions of bond duration and derived quantities vary considerably. But possibly the most common definition of duration most experts use in Macaulay duration.

The way duration is arrived using Macaulay method at is by using a ratio of the percentage reduction in the price of the bond to the percentage increase in the redemption yield of the bond. The equation for doing this is not for the faint of heart but it does allow for small changes in quantities. The number of years become the duration units, and the range of duration is always between 0 years and the time to maturity of the bond.

For those who feel the need or desire to actually use the Macaulay it can be easily found on the internet but what is more important to understand is that Macaulay duration is the weighted average maturity where the relative discounted cash flow is computed in each period. The idea is to have tools to predict interest rate risk by using either the Macaulay-Weil duration method which uses zero-coupon bond prices as discount factors, or a perhaps more practical method which uses the bond's yield to maturity to arrive at the discount factors.

Bond duration is a key factor when it is remembered that bonds are not risk free. The reverse relationship between interest rates and bond prices is one aspect of bonds that cannot be ignored and the larger the duration numbers are the higher the risk-rate becomes. Understanding the credit risk represented by defaults as well as the interest rate risk allows the investor to make better decisions. And while bond duration is a standard data point that is usually part of the information provided with bonds and bond mutual funds understanding the concept is essential to making good investments.

Discuss It!
1 2 >||| said:

The reverse relationship between interest rates and bond prices is one aspect of bonds

login said:

Nice post! Youâve really made my day today with this. Thank you

celebritynetworths.org/celebrity-net-worth/royals/ said:

I thought I would leave my first comment. I don't appreciate what to state beside that I have had a magnificent time taking a gander at.

BigHornLaw said:

Much thankfulness to you for get-together it into a simple to look at and stunningly made post.

roll bars for trucks said:

I see your persistent work on this and thank you for this information. You have what it takes to get attention.

Our site said:

I am believing a practically identical best work from you later on also. Intriguing post.

Phuket Property said:

This article is had with style and I am giving remarkable compliment. Truly radiant occupation !

download serial number generators said:

I Have Been considering about this issue, so a guarantee of thankfulness is all together to post. Really cool post.

click here said:

I thoroughly getting a charge out of every last bit of it. It is an exceptional site and grand offer.

http://www.acreytharp.com/ said:

I appreciate something harder on specific web diaries standard. I thoroughly getting a charge out of every last bit of it.

best reviews said:

From the monster measures of comments on your articles, I figure I am not by any procedures the unrivaled having all the relaxing up here !

Shanice said:

It is an extraordinary site and great offer.Your site shockingly this specific page is genuinely to a magnificent degree stunning.

Language of Desire said:

I really loved reading your blog. It was very well authored and easy to understand. Unlike other blogs I have read which are really not that good.Thanks alot!

writemypapersclub.com said:

I found your site perfect for me. It joins brilliant and basic posts.

Love Commands said:

I really appreciate the kind of topics you post here. Thanks for sharing us a great information that is actually helpful. Good day!

best mountain bikes under $1000 said:

mountain bikes under 500

downlodable videos said:

Hey what a splendid post I have go over and trust me I have been hunting out down this comparative sort of post for recent week and barely went over this. Much thanks and will search for more postings from you.

downlodable tv shows said:

Hello, I have browsed most of your posts. This post is probably where I got the most useful information for my research. Thanks for posting, maybe we can see more on this. Are you aware of any other websites on this subject.

https://www.youtube.com/watch?v=Q1sBuZkEdLU said:

In a general sense anticipated that would illuminate you that you have people like me who welcome your work.

wash-site.ru said:

Maintain the nice perform, My partner and i examine handful of content with this internet site and also I do believe your net website will be genuine intriguing and contains received sectors regarding great details.

Most Popular Articles
Most Popular Definitions
Daily Definition

Definition of the Day Insider Selling

Insider Selling - Insider selling typically means the running for the hills. It could simply mean company, or corporate executives borrowed too much. Many investors sell more held stock certificates because they are forced to, rather than because these investors want to. The corporate stock certificate investor's insider sales are...

read entire definition




Home     About Us    Contact Us     Contribute     Sitemap


Copyright © 2009 TeenAnalyst.com