Question

Duration Group of answer choices assesses the time element of bonds in terms of both coupon and term to maturity. allows structuring a portfolio to avoid interest-rate risk. is a direct comparison between bond issues with different levels of risk. assesses the time element of bonds in terms of both coupon and term to maturity and allows structuring a portfolio to avoid interest-rate risk. assesses the time element of bonds in terms of both coupon and term to maturity and is a direct comparison between bond issues with different levels of risk.

Answer 1

Answer:

assesses the time element of bonds in terms of both coupon and term to maturity and allows structuring a portfolio to avoid interest-rate risk.

Explanation:

A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.

Duration assesses the time element of bonds in terms of both coupon and term to maturity and allows structuring a portfolio to avoid interest-rate risk.

An interest-rate risk can be defined as the risk associated with bond owners due to fluctuating interest rates. This risk has a direct level of impact on the value of fixed income securities such as bonds.