The Basics Of Bond Duration



Next video:
Loading the player...

Duration tells investors the length of time, in years, that it will take a bond's cash flows to repay the investor the price he or she paid for the bond.

A bond’s duration tells investors how much a bond's price might change when interest rates change i.e. how much risk they face from interest rate changes.

Related Articles
  1. Financial Advisors

    Why You Should Avoid Fixating on Bond Duration

    Financial advisors and their clients should then focus on a bond fund’s portfolio rather than relying on any single metric like duration.
  2. Professionals

    Duration

    Understanding duration helps to determine a bond's price volatility.
  3. Professionals

    Bond Risks and Duration

    NASAA Series 65: Section 16 Bond Risks and Duration. In this section types of bond risks and duration.
  4. Bonds & Fixed Income

    Advanced Bond Concepts: Duration

    The term duration has a special meaning in the context of bonds. It is a measurement of how long, in years, it takes for the price of a bond to be repaid by its internal cash flows. It is an ...
  5. Investing

    Watch Your Duration When Rates Rise

    While recent market volatility is leading investors to look for the nearest exit, here are some suggestions for bond exposure in attractive sectors.
  6. Bonds & Fixed Income

    What Does Duration Mean?

    Duration measures a fixed-income’s sensitivity to changes in interest rates.
  7. Professionals

    Duration and Stock Risks

    FINRA/NASAA Series 66: Section 5 Duration and Stock Risks. This section discusses duration and risks associated with investing in the stock markets: systematic, unsystematic, business, regulatory ...
  8. Economics

    The Effect of Fed Fund Rate Hikes on Your Bond Portfolio

    Learn how an increase in the federal funds rate may impact a bond portfolio. Read about how investors can use the duration of their portfolio to reduce risk.
  9. Options & Futures

    Immunization Inoculates Against Interest Rate Risk

    Big-money investors can hedge against bond portfolio losses caused by rate fluctuations.
  10. Professionals

    Effective, Modified, and Macaulay Duration

    CFA Level 1 - Duration. Learn the differences between effective, modified and Macaulay duration. Shows how to apply a weighted duration to a portfolio of bonds.

You May Also Like

Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center