Bond Term Structure and Duration to Reduce Risk

Weibo Jiang ()
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Weibo Jiang: Foreign Economic and Trade University

A chapter in Proceedings of the 2024 4th International Conference on Enterprise Management and Economic Development (ICEMED 2024), 2024, pp 113-119 from Springer

Abstract: Abstract In the investment market, investors face various risks every day. However, rare investors fully understand how to diversify by DCF methods and duration methods. Everyone is risk-averse, in order to reduce the risk, investors need to diversify their portfolio, in which bonds is a hully important part. The paper will show us how to use DCF methods and duration method to hedge the risk by balancing proper weight of each certain of bond. In order to make the method more convincing and easier to understand, argument process shows how adopt a specific method to analyze two bonds- “Bright Diary” and “Huatai Securities Co., Ltd.” in a specific situation and show how to use this method to avoid risks. The conclusion shows by purchasing specific share of different bond, the portfolio will be less affected by interest rate. In other words, the risk has been hedged and this will greatly help the investors to make their future investing strategies.

Keywords: bond; Duration; investment decision-making; fixed-income investment; interest rate risk (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-506-5_14

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DOI: 10.2991/978-94-6463-506-5_14

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