Quantcast

Effective duration

Definition:

The duration calculated using the approximate duration formula for a bond with an embedded option, reflecting the expected change in the cash flow caused by the option. Measures the responsiveness of a bond's price - taking into account that expected cash flows will change as interest rates change due to the embedded option.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Oligopoly

A Market characterized by a small number of producers who often act together to control the supply of a particular good and its market price.

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!





Create your free portfolio




Investing Tools

stock screener icon
Stock Screener

Find opportunities in the market using criteria based on 145 data elements.

portfolio tracker icon
Portfolio Tracker

Create a portfolio of selected assets that are updated dynamically intraday.

guru icon
Guru

Evaluate stocks that meet the investment criteria of the greatest investors.