1 Relevance Of Duration Analysis To Term Finance Certificates Gul Faraz* and Zeba Shariff Khan** The research paper reviews the Duration Analysis of selected term finance certificate (TFC) issues. A term finance certificate (TFC) is a corporate debt instrument issued by companies In Pakistan to generate long and medium term funds (DAWN, May 11,2003). In this paper TFC issues have been analyzed using Macaulay duration and Modified duration models. The TFCs issued by the sample company has been categorized into lots of Rs.5,000, Rs.25,000, Rs.50,000, Rs.100,000 and multiples of Rs.100,000 with mandatory six monthly profit payment to the TFC holders. The overall yield to maturity (YTM) on the above categories of term finance certificate (TFC) is 12% per annum. The redemption payment to the TFC holders against their original investment amounts to Rs.5,300, Rs.26,500, Rs.53,000, Rs.106,000 and Rs.1,060,000 respectively. The long duration as per Macaulay duration model is 5.95 years based on the price of TFC’s. This implies that the return to TFC holders is 12% per annum on cumulative issues covering 5.95 years while the company is giving the return in 5 years. The short duration as per Modified duration model is 5.78 years based on the price of TFC’s. This implies that the profit payment to TFC holders is 12% per annum on the overall issues covering for 5.78 years and the company is giving the return in 5 years. The results are in accordance with the portfolio theory concerning bond analysis. The TFC’s have all the characteristics of bond yet it is redeemable capital or subordinated loan. Field of Research: Finance – Corporate Bonds (Term Finance Certificates) _______________________ * Gul Faraz, Graduate College of Management Sciences, PAF - Karachi Institute of Economics & Technology email: gfraz@yahoo.com ** Zeba Shariff Khan Assistant Professor, College of Management Sciences, PAF-Karachi Institute of Economics & Technology email: z_sqamarkhan@yahoo.com