Duration is
A)an asset's term to maturity.
B)the time until the next interest payment for a coupon bond.
C)the average lifetime of a debt security's stream of payments.
D)the time between interest payments for a coupon bond.

Question

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Duration is the average lifetime of a debt security's stream of payments, taking into account the timing and amount of each payment. It is calculated by weighting each payment by the time until its receipt and dividing the sum by the security's total present value. It is useful for measuring interest rate risk and for comparing bonds with different maturities and coupon rates. Options A, B, and D do not accurately define or measure duration.

Duration Is