Home > Term: effective duration
effective duration
The duration calculated using the approximate duration formula for a bond with an embedded option, reflecting the expected change in the cash flow caused by the option. Measures the responsiveness of a bond's price-taking into account that expected cash flows will change as interest rates change due to the embedded option.
- Part of Speech: noun
- Industry/Domain: Financial services
- Category: General Finance
- Company: Bloomberg
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- Jessehe
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