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What does DOB stand for?

DOB stands for Duration Of Bond


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For example, a 10-year Treasury bond has a 10-year maturity. Duration is a slightly more complicated concept, but it’s very useful for understanding how bonds and other fixed-income investments work. The duration of a bond is the weighted-average period of time before the cash flows involved are received. (Technical note for those curious: The weight for each period is not based on the nominal value of the cash flow received at that time, but rather the present value of the cash flow.
Additionally, zero coupon bonds have the same duration and maturity and therefore have the highest risk to interest rate changes. Zero coupon bonds aside, the duration of a bond will always be shorter than its term to maturity. One final generalization we can make is that lower coupon bonds will have higher durations than larger coupon bonds and therefore, larger coupon bonds will be less volatile when interest rates are changed.
Duration of a Bond: An Introduction - Duration: 3:12. by Friendly Finance with Chandra S.
Using Bond Duration As a Portfolio Management Strategy You can probably see how bond duration could be used to make speculations on the direction of interest rates and how, if you were correct, the gains could be huge by choosing high duration bonds. Likewise, the losses could be massive if you turn out to be wrong and there is no way to predict the direction of short-term interest rates.
Also needed is a measure that could be used as a guide to the sensitivity of a bond to interest rate changes, since price sensitivity tends to increase with time to maturity. The statistic that aids investors in both areas is duration. Read on to find out how duration and convexity can help fixed-income investors gauge uncertainty when managing their portfolios. (For background reading, check out our Advanced Bond Concepts tutorial. ) Duration DefinedIn 1938, Frederick Macaulay termed the effective-maturity concept the duration of thebond.
After all, the modified duration (% change in price) is almost the same number as the Macaulay duration (a kind of weighted average years to maturity). For example, the annuity above has Macaulay duration of 4. 8 years and we might think that it is sensitive to the 5-year yield. But it has a cash flows out to 10 years and thus will be sensitive to 10-year yields. If we want to measure sensitivty to parts of the yield curve we need to consider key rate durations. For bonds.