Average Effective Duration

Business, Legal & Accounting Glossary

Definition: Average Effective Duration

Average Effective Duration

Full Definition of Average Effective Duration

A measure of the expected volatility of a bond fund in response to interest rate fluctuations. The time to maturity impacts the sensitivity of any given bond. For example, the effects of a shift in interest rates would be five times greater for a 10 year treasury bond than a 2 year treasury bond. As interest rates go up, the duration shortens and the bond is expected to decrease in price. With bond funds, the effective duration for many bonds with different maturity dates and yields within the fund is averaged.

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Average Effective Duration. PayrollHeaven.com. Retrieved November 29, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/average-effective-duration/

Definition Sources

Definitions for Average Effective Duration are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 20th November, 2021 | 0 Views.