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In finance, the duration of a financial asset that consists of fixed cash flows, such as a bond, is the weighted average of the times until those fixed cash flows are received. When the price of an asset is considered as a function of yield , duration also measures the price sensitivity to yield, the rate of change of price with respect to ...
Formally, the duration gap is the difference between the duration - i.e. the average maturity - of assets and liabilities held by a financial entity. [3] A related approach is to see the "duration gap" as the difference in the price sensitivity of interest-yielding assets and the price sensitivity of liabilities (of the organization) to a change in market interest rates (yields).
Financial management is the business function concerned with profitability, expenses, cash and credit. These are often grouped together under the rubric of maximizing ...
The duration of an equity is a noisy analogue of the Macaulay duration of a bond, due to the variability and unpredictability of dividend payments. The duration of a stock or the stock market is implied rather than deterministic. Duration of the U.S. stock market as a whole, and most individual stocks within it, is many years to a few decades.
Asset and liability management (often abbreviated ALM) is the term covering tools and techniques used by a bank or other corporate to minimise exposure to market risk and liquidity risk through holding the optimum combination of assets and liabilities. [1]
Among other things, the value of Ke and the Cost of Debt (COD) [6] enables management to arbitrate different forms of short and long term financing for various types of expenditures. Ke applies most prominently to companies that regularly generate excess capital (free cash flow, cash on hand) from ongoing operations.
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Duration (finance) – the weighted average time until the various cash flows from a security, such as a bond, are received; Duration (music) – an amount of time or a particular time interval, often cited as one of the fundamental aspects of music; Duration (philosophy) – a theory of time and consciousness first proposed by Henri Bergson