Question
How does empirical duration differ from analytical duration in fixed-income risk measurement?
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Answer
Empirical duration is estimated from historical regressions, not pricing formulas.
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Question
For a zero-coupon bond, where is its key rate duration concentrated?
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Answer
At the bond's maturity date.
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Question
What does empirical duration estimate using regression-based methods?
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Answer
Observed price sensitivity to market yield changes.
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Question
If a bond's risk comes from yield changes at one specific maturity rather than all maturities equally, which measure is more appropriate than effective duration?
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Answer
Key rate duration.
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