Why do bond portfolio managers use the concept of duration? A) It assesses the time element of bonds in terms of both coupon and term to maturity. B) It allows structuring a portfolio to take advantage of changes in credit quality. C) It enables direct comparisons between bond issues with different levels of risk. D) Duration is the only measure of bond risk. can someone pls explain what option A means…
Duration is similiar to interest rate risk. The time to maturity and coupon will influence the interest rate risk that fixed income is prone to.
Yeah, it’s an odd way of saying that duration is a weighted average of the times until cash flows.
Thanks…
What is C?