Saturday, December 25, 2010

Average Portfolio Maturity

The average portfolio maturity is a metric for analysis of bond portfolios, it is simply the average maturity of all the bonds in a portfolio. The purpose of knowing this metric is understanding the cash flow profile as well as the interest sensitivity of the portfolio; a portfolio with a short average maturity is exposed to interest rate levels in the near term. A related term is duration, a measure that indicates the value impact of changes in interest rates, rather than the pure income impact.

Synonyms: Portfolio maturity, Bond portfolio analysis
 
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