Duration measures
A) weighted average time until a bond's half-life.
B) weighted average time until cash flow payment.
C) the time required to recoup one's investment,assuming the bond was purchased for $1,000.
D) a and c.
E) b and c.

Question

Quizplus · Accepted Answer

Duration measures are calculated as the weighted average time until cash flow payment, and also represent the time required to recoup one's investment assuming the bond was purchased for $1,000. Therefore, option E is the correct answer. Option A refers to the concept of half-life, which is not directly related to duration measures. Option C is partially correct, but it only considers the time required to recoup one's investment, and not the weighted average time until cash flow payment.

Duration Measures