Concept of Duration

It is the weighted average term for maturity of a Bond's cash flow. 9% 8TCS2024 FV is 1000 Tenure is 10 Years Time IMPACT on Cash Flow Year Coupon DCF Time Weighted DCF 1 80 73.394495 73.3944954 Held by issuer for 1 yr 2 80 67.334399 134.668799 3... More

It is the weighted average term for maturity of a Bond's cash flow. 9% 8TCS2024 FV is 1000 Tenure is 10 Years Time IMPACT on Cash Flow Year Coupon DCF Time Weighted DCF 1 80 73.394495 73.3944954 Held by issuer for 1 yr 2 80 67.334399 134.668799 3 80 61.774678 185.324035 4 80 56.674017 226.696068 5 80 51.994511 259.972555 6 80 47.701386 286.208317 7 80 43.76274 306.339177 8 80 40.149302 321.194419 9 80 36.834222 331.508001 Held by issuer for 9 yrs 10 1080 456.20367 4562.03671 935.82342 6687.34258 DURATION 7.1459 If 9% is the RRR then 935.8 paid today(present) is equivalent to 80 paid per year till 10 years & 1000 paid at the end If 12% is the RRR then774 paid today(present) is equivalent to 80 paid per year till 10 years & 1000 paid at the end If 5% is the RRR then1232 paid today(present) is equivalent to 80 paid per year till 10 years & 1000 paid at the end Duration is a point where 50% of the Present Value of the BOND is recovered By coupon approx in 5.5 yrs Less