Question

Explain the difference between the two strategies duration management and yield curve management for investing in...

Explain the difference between the two strategies duration management and yield curve management for investing in bonds. They can be similar but what are the key differences between the two strategies.

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Answer #1

Duration management can be defined as a tool for calculating the fixed-income by the fixed income portfolio managers. It is a measure of checking the bond's price sensitivity for the higher movements in interest rates.

A yield curve can be defined as a yeild line which is plotted for the yields or the interest rates of bonds that have equal or same credit qualities but have different maturity dates.

They are similar as both of them are tools of srategic measurement of interest rates but are different as one works for similar maturity dates and other for different dats.

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