Duration Averaging


Definition of "Duration averaging"

Veronica Bedell-Nevels real estate agent
Veronica Bedell-Nevels, Real Estate Agent Priority Plus Realty Inc.

Disciplined approach to managing an insurance company's bond portfolio duration. When interest rates rise, the average maturity and duration of the bond portfolio is lengthened, resulting in the portfolio becoming more aggressively positioned to take advantage of the falling bond prices. Conversely, when interest rates fall, the average maturity and duration of the bond portfolio is shortened, resulting in the portfolio becoming more defensively positioned to take advantage of the rising bond prices.

 

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