DEFINITION of 'Dollar Duration'
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.
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.

Bond Valuation
A technique for determining the fair value of a particular bond. ... 
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A measure of the curvature in the relationship between bond prices ... 
Effective Duration
A duration calculation for bonds with embedded options. Effective ... 
Macaulay Duration
The weighted average term to maturity of the cash flows from ... 
Modified Duration
A formula that expresses the measurable change in the value of ... 
Duration
A measure of the sensitivity of the price (the value of principal) ...

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Fundamental Analysis
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Investing
Watch Your Duration When Rates Rise
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