What is the 'Dollar Duration'
The dollar duration measures the dollar change in a bond's value to a change in the market interest rate. The dollar duration is generally used by professional bond fund managers as a way of approximating the portfolio's interest rate risk. Dollar duration is one of several different measurements of bond duration.
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BREAKING DOWN 'Dollar Duration'
Dollar duration is based on a linear approximation of how a bond's value will change in response to changes in interest rates. The actual relationship between a bond's value and interest rates is not linear. Therefore, dollar duration is an imperfect measure of interest rate sensitivity, and it will only provide an accurate calculation for small changes in interest rates.
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Key Rate Duration
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The calculation of a bond's duration based on historical data. ...
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RELATED FAQS

How does duration impact bond funds?
Learn how duration for a bond fund measures the risk the bond portfolio has to a rise in interest rates, and see how managers ... Read Answer >> 
Which is a better metric, modified duration or Macaulay duration?
Learn why the modified duration is a more useful metric than the Macaulay duration, and understand how the measures are different ... Read Answer >> 
One way to determine the volatility of a bond is to calculate its duration ...
The correct answer is a): Duration is the change in the value of a fixed income security that will result from a 1% change ... Read Answer >> 
How can I use a bond's duration to predict its return?
Learn how the concept of duration is used to determine when future cash flows for a bond will equal the amount paid for the ... Read Answer >> 
What is the relationship between modified duration and interest rates?
Learn about modified duration and Macaulay duration, how to calculate the durations of bonds, and how interest rates and ... Read Answer >> 
What does the Macaulay duration indicate about a bond?
Learn how the Macaulay duration shows the relationship between interest rate changes and the price of bonds, and see how ... Read Answer >>