Why is duration important for investing in bonds

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Reference no: EM131928953

1. Why is duration important for investing in bonds

Investors need to know the relationship between interest rates and prices

Investors need to know the “average” maturity of the bonds they are considering

Investors need to know the coupon rates of the bonds they are considering

Investors need to know the yield to maturity

2. We can think of duration as the slope of a line that is tangent to the convex

price-yield curve at the expected future price and expected yield of the bond

price-yield curve at the current price and expected yield of the bond

price-yield curve at the current price of the bond

price-yield curve at the current price and yield of the bond

Reference no: EM131928953

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