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dear sir,
can i know what is the difference between bond maturity and bond duration?i know when a bond matures,interest and principal will be paid..bond maturity is d average time it takes for a bond to pay its coupon and principal..but why duration aso measures the redemption period??is redemption period the same as maturity?thanks!‘Maturity’ has two meanings. Normally it simply means the actual date on which the bonds will be redeemed/repaid.
It is sometimes also used to mean the average time, and when used in that sense it is the same as the duration. (The examiner will not confuse the meanings – he will make it clear).
The redemption period is the time till maturity (maturity in the normal sense of the word). So if a bond is due to be redeemed in 10 years time, then the redemption period is 10 years.
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