Investing term

What is Duration?

A measure of how much a bond's price moves when interest rates change. Longer duration = more price sensitivity.

Duration measures how sensitive a bond's price is to changes in interest rates, expressed in years. The longer the duration, the more the price moves when rates shift. It's the key risk gauge for bond holders: a long-duration bond can lose serious value if rates rise, while a short-duration one barely flinches.

For example

A bond with a duration of 8 years falls about 8% in price if interest rates rise by 1% — the same rate move barely dents a 2-year bond.

Duration is taught hands-on in Stage 4 — Stocks, Bonds, Cash & Alternatives.

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Related terms

AlternativesInvestments outside the core stocks/bonds/cash mix — REITs, commodities, gold, crypto.BondA loan from you to an issuer (government or company), repaid with interest on a known schedule.Capital gainThe profit from selling an investment for more than you paid.CommodityA raw physical good like gold, oil, wheat, or copper — priced by the ounce, barrel, or bushel.
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