please help on duration, thanks!

shangfhai

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why is the average duration of a 6-month investment in a cash instrument equal to 0.25???
i dont get it.
thanks!
 
The (modified) duration of a spot payment is (slightly less than) the amount of time remaining until the payment is received. Thus, the duration of a 6-month investment in cash starts at about 6 months, then winds down to zero as the maturity approaches. On average, therefore, it will be half of the original maturity, or 3 months, 0.25 years.
 
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