Duration: The Most Commmon Measure of Bond Risk
Different Duration Measures
The Uses of Duration Tools
Equal Duration Does Not Mean Equal Returns
Yield Curve Basics
Calculating bond yields
What is the Yield Curve?
The Shape of the Yield Curve
The Slope of the Yield Curve
Different Uses of the Yield Curve
What is a Benchmark?
The Effect of Currency
The Main Considerations in Benchmark Selection
What Makes a Good Benchmark?
What is Inflation?
How Is Inflation Measured?
Causes of Inflation
Investment Returns and Inflation
Protecting Against Inflation
Controlling Inflation
Your Investment
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1. Duration is a measurement of a bonds; Length of time until maturity Length of time since the bond was issued Time between coupon payments Sensitivity to interest rates
2. A bond has a duration of 5.3 years. if interest rates fall by 1%, the price of the bond will; Rise by 1% Fall by 1% Rise by 5.3% Fall by 5.3% Remain unchanged
3. A bond portfolio which goes up in value as the yield curve flattens is said to have; Positive curve duration Negative curve duration A positive spread duration A negative spread duration
4. Which portfolio is likely to experience the most price volatility? One comprised of cash One comprised of 3 year bonds One comprised of 5 year bonds One comprised of 10 year bonds
5. A portfolio Manager who believes that interest rates are likely to rise will protect capital by; Lengthening the duration of the portfolio Decreasing the duration of the portfolio
