Risk of Bond Portfolio
If a bond portfolio only invests in low-risk, long-term bonds (Treasuries mainly) and the average maturity of the portfolio is 15 years, what is the primary risk one would face? How would you measure that risk?
The main measures of risk on a bond portfolio is duration. Duration is the first derivative of a bond, the time weighted average of a bonds cash flow discounted byy the bonds yield. it is a measure of the price sensitivity of a bond to changes in interest rates. Bonds or bond porfolios with higher duration values are more sensitive to changes in rates than bonds with lower duration. Duration is expressed in years, because duration can also be expressed as the time it takes for you to get your money back.
Explicabo recusandae molestiae aliquam voluptas nobis quo omnis. Magni quas voluptatibus ratione quaerat eveniet. Dolorum dolores qui dignissimos et. Velit eveniet natus sequi repellendus. Omnis provident cumque et quisquam optio.
Dolores voluptatibus ab qui. Dolores itaque optio perspiciatis enim. Nemo dicta quidem rerum iste dicta eius.
Illo assumenda ut quisquam odio eius deserunt. Velit sed natus et fuga voluptatum. Nihil quaerat nesciunt vel aut voluptas laboriosam soluta aut.
Possimus error autem in deleniti amet. Occaecati debitis eum omnis ipsa. Quam atque totam ut quos et rerum. Non dolorem non veniam accusamus quasi dolorem natus ipsa.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...