ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARY
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DURATION, in securities, is a measure in years of interest rate risk for a specific security or portfolio. Duration is the weighted average time to receive the present value of cash flows from a specific security or portfolio. When the duration is divided by the discount rate plus one, the resulting modified duration measures the sensitivity of a bond to changes in interest rates. Used by bond managers instead of maturity as it accounts for all principal and interest cash flows in addition to the final maturity payment. For example, the duration of a 10-year zero-coupon bond equals its maturity of 10, while the duration of a 10-year 7.5% coupon bond is less than seven years.
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POP see PROOF OF POSTING.
OPPORTUNISTIC BEHAVIOUR occurs where one party takes advantage of his superior knowledge, in order to further his/her interests, by failing to disclose such information to the other party. This would occur, for example, if a supplier of widgets had information about a product which was deliberately withheld from the potential buyer, in the knowledge that such information would negatively affect the price of the product or the willingness of the buyer to purchase it.