What is duration? What factors affect the duration of a bond? 

2. Is duration the same as term to maturity? Which one do you think is always less than the other? 

3. If fund managers believe that interest rate are ready to fall, what should they do in regards to duration of their funds? How? 

Preferred stocks: 

1. Are preferred stocks free from interest rate risk? 

2. What are the advantages of preferred stocks over bonds? 

3. Which security do you think is more risky - a 10 year bond with a 5% interest rate or a preferred stock with a 5% dividend rate? 

Answer rating: 100% (QA)

1 Duration is a measure of the sensitivity of a bonds price to changes in interest rates It is the w... View the full answer