How much a bond's price moves when interest rates move
Duration estimates how many percent a bond's price moves when interest rates move by one percentage point. The longer the time to maturity, the larger it gets and the more the price swings. That is why a long bond moves more than a short one on the same rate change. The earlier the interest arrives, the smaller the number.
A bond with a duration of 5 falls about 5% in price when rates rise by 1%.
For learning, not investment advice. Decisions are your own.
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