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OLga [1]
3 years ago
7

Which of the following statements are true about duration?

Business
2 answers:
oee [108]3 years ago
8 0

Answer:

b. It presents the effective average maturity of the bond's cash flows.

d. The duration of a zero-coupon bond is equal to its time to maturity.

Explanation:

Duration is the weighted average of the time periods where Time period are weighted by multiplying by the present value of its cash flow divided by the bond's price.

AnnyKZ [126]3 years ago
4 0

Answer:

a. It is a weighted average of time period where the weights are the percentage of the bond's value coming from that period.

c. It is used to assess a bond's credit risk.

d. The duration of a zero-coupon bond is equal to its time to maturity.

Explanation:

Duration of a bond is a measure of relative change in price with change in interest rate. A bond is weighted average of times until fixed cash flows are received. The duration of a zero coupon bond is always equal to its time to maturity. The cash flows for these types of bonds are positive and fixed. Duration is also used to assess risk exposure and credit risk of a bond.

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Which one of the following statements would generally be considered as accurate given independent projects with conventional cas
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3 0
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