Q642
For an investment, weighted average time to maturity is considered as
A.
premium time
B.
standard time
C.
mean time
D.
duration
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
For an investment, weighted average time to maturity is considered as duration. Duration is defined as the average time it takes to receive all the cash flows of a bond, weighted by the present value of each of the cash flows. Essentially, it is the payment-weighted point in time at which an investor can expect to recoup his or her original investment.