Duration and immunization

Duration and immunization

Bachelor of Business Studies (BBS) — Fourth Year

Subject: Fundamentals of Investment (FIN 253)

Unit 8: Bond Valuation

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of duration and immunization.
• Apply the relevant financial concepts or calculations and explain their assumptions, risks and analytical limits.

Curriculum Scope

• Duration and immunization: the concept of duration, measuring duration
• Bond duration and price volatility
• Uses of bond duration measures

Detailed Microsyllabus

1. Duration

   1. Meaning and calculation.
   2. Cash-flow weighting.
   3. Relationship with price sensitivity.

2. Immunization

   1. Use duration to manage stated rate exposure.
   2. Compare asset and liability timing where relevant.
   3. Explain limits from changing rates and cash flows.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 89–91.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here. Examples involving current laws, rates, institutional products or Nepalese status must identify the relevant period and official materials; no changing numerical or legal requirements are invented here.