What is Duration?

Question

What is Duration?

Accepted Answer

Duration is a critical measure in fixed-income analysis that quantifies a bond's price sensitivity to a 1% change in interest rates, serving as a key metric for managing interest rate risk in portfolios of Treasury securities and tokenized Real-World Assets (RWA).

Duration

What is Duration?

What is the fundamental difference between Macaulay Duration and Modified Duration, and how are they applied in Treasury portfolio management?

How does the concept of Duration extend to Real-World Asset (RWA) tokenization, and what specific risks does it help mitigate in this emerging market?

What are the primary factors that influence a bond's Duration, and how do they impact its interest rate sensitivity?

Why is Convexity necessary as a second-order measure to correct for the limitations of Modified Duration in fixed-income analysis?

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