What is the duration of stocks?

The duration of the shares is a deadline that is often associated with the structure of capital stock options and has to deal with the relation between the change in the price of these shares and a change in the delivery of the revenues of these shares in the long term. Understanding how changes in prices affect revenues generated by shares make it easier for investors to design expected revenues if the shares are held for a specified period of time, allowing the incidence of price change and the resulting shift in revenues. Assessing the duration of the shares involves the ability to identify trends on the market and apply them to the shares in question, resulting in the ability to better understand the chance to get profit from holding.

The projection of the duration of stocks usually includes the use of a specific formula to determine what is known as a dividend discount. In order to use this approach, it is necessary to identify a discount rate that applies to shares as as an expected growth rate for a certain period of time. This approach will require 1% shift in the expected return, and this oneThe shift is positive or negative based on what is expected on the market.

Depending on what is likely to occur with the market value of shares during the considered period, the duration of shares may indicate a favorable return or one less than desirable. Using this information, the investor can decide whether the asset is worth obtaining or holding or whether the asset should be sold in favor of a more attractive duration. The process is only effective if the market movement and the effect on revenues generated by shares is accurate. If the shares work in a way that differs from projections, this favorable profit may turn into a loss of Nebon.

As with most strategies used to predict growth with asset, the duration of stocks requires accurate assessment of what will happen in the future. It makes it easier to find out if movement in the future is probably favorable, what impactIt may have changes in interest rates for dividends that are generated, and although the expected growth is sufficient to deserve the purchase and possession of shares. One of the advantage of projecting the duration of the shares is that this process motivates investors to consider the market in more detail, which can also be useful in assessing the potential of other shares traded in the same market.