Point in Time Repayment of Present Value of Security

B

The answer to this question is B. Duration.

Duration is a financial metric that measures the sensitivity of a bond's price to changes in interest rates. Specifically, it represents the weighted average time until the present value of a bond's cash flows is repaid. It takes into account both the timing and the amount of the cash flows, as well as the bond's yield and maturity.

The higher the duration of a bond, the more sensitive it is to changes in interest rates. This is because when interest rates rise, the present value of a bond's cash flows decreases, and the longer it takes for those cash flows to be paid, the greater the impact on the bond's price. Conversely, when interest rates fall, the present value of a bond's cash flows increases, and the longer it takes for those cash flows to be paid, the greater the benefit to the bond's price.

Yield to maturity, on the other hand, is the total return anticipated on a bond if it is held until it matures. It takes into account the bond's current market price, par value, coupon rate, and time to maturity. It is not a measure of the point in time when the present value of a bond's cash flows is repaid.

Convexity is a measure of the curvature of the relationship between a bond's price and its yield. It is a secondary factor that affects a bond's sensitivity to interest rate changes, but it does not represent the point in time when the present value of a bond's cash flows is repaid.

Immunization is a risk management strategy that seeks to balance a portfolio's sensitivity to interest rate changes with its need for a certain level of return. It involves matching the duration of a portfolio to the time horizon of its liabilities, so that changes in interest rates have a minimal impact on the portfolio's overall value. It is not a measure of the point in time when the present value of a security is repaid.