Why duration confuses otherwise strong candidates
Duration becomes much easier once you stop treating it as one formula with several aliases. The exam is really asking three different questions:
- How far away, in weighted-average time terms, are the bond's cash flows?
- How much will price change if yields move?
- Which yield move are we talking about: a parallel shift, a single point on the curve, or a rate move that also changes cash flows?
If you keep those three questions separate, most fixed-income duration problems become classification problems before they become math problems.