can anyone tell me what’s an asset duration? I know duration of a bond, roughly the time u get the full payment, coupons therefore reduce it. but what the heck is the duration of the asset you already have? in a question I remember the phrase"assume the duration of the assets is 6.0". What does that mean? (I hate durations)
Are you serious??
time you have until you must change the batteries of your bond
seriously very cool replies… but I would appreciate an answer!!
This can be best explained in a setting of pension fund managment or any ALM setting. You have liablility need to meet and your liability has duration, you also have asset to satisfiy those liablities, you have bond as an asset, stock as an asset, or any other asset. Assume your asset are all bonds, then the average duration of all those bonds is the duration of your asset. Hope this helps.