What is duration in fixed income investing?

Duration measures a bond’s sensitivity to interest rate changes, with a longer duration indicating greater sensitivity and higher risk to price fluctuations caused by changes in interest rates.

How is duration different from maturity?

Duration is a measure of price sensitivity to interest rate changes, while maturity is the length of time until a bond’s principal is repaid. Duration takes into account the bond’s coupon payments and the timing of those payments, making it a more accurate measure of interest rate risk.

How does duration affect a bond’s price?

If interest rates rise, bonds with longer durations will experience a larger price decline compared to bonds with shorter durations. Conversely, when interest rates fall, longer-duration bonds will experience a larger price increase.

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What is DURATION (FIXED INCOME)?

DURATION IN DAYS

Duration in Days measures the total number of days elapsed since the start of a transaction, trade, or portfolio, whether open or closed, providing a clear view of its overall lifespan.

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What is DURATION (FIXED INCOME)?

DURATION IN DAYS

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