The Duration of a Portfolio of Bonds Can Be Calculated

question 13

Multiple Choice

The duration of a portfolio of bonds can be calculated as _______________.

• A) the coupon weighted average of the durations of the individual bonds in the portfolio
• B) the yield weighted average of the durations of the individual bonds in the portfolio
• C) the value weighed average of the durations of the individual bonds in the portfolio
• D) averages of the durations of the longest and shortest duration bonds in the portfolio

Learn to use data tables for Monte Carlo simulations in Excel.

Understand the differences and uses of Monte Carlo and Latin Hypercube sampling.

Learn to interpret and apply statistical techniques such as bootstrapping within Crystal Ball.

Understand the application of tornado and sensitivity charts for decision making.

---

Definitions:

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how much the values deviate from the mean of the set.

Mean

The average of a set of numerical values, calculated by dividing the sum of the values by the number of values.

Normal Distribution

A bell-shaped frequency distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Standard Deviation

A statistic that measures the dispersion or spread of a set of data points relative to its mean.