Duration


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Duration

A common gauge of the price sensitivity of a fixed income asset or portfolio to a change in interest rates.

Duration

The amount by which a bond's price increases or decreases as the result of a 1% change in interest rates. When interest rates rise above a bond's own interest rate, its price usually declines because an investor can earn a higher yield with another bond. Likewise, when interest rates fall, the bond's price usually rises. Duration measures how much the price changes and, for that reason, is a measure of a bond's volatility.

duration

The number of years required to receive the present value of future payments, both interest and principal, from a bond. Duration is determined by calculating the present value of the principal and each coupon and then multiplying each result by the period of time before payment is to occur. The concept of duration is used to relate the sensitivity of bond price changes to changes in interest rates. Also called mean term.

Duration.

In simplified terms, a bond's duration measures the effect that each 1% change in interest rates will have on the bond's market value.

Unlike the maturity date, which tells you when the issuer has promised to repay your principal, duration, which takes the bond's interest payments into account, helps you to evaluate how volatile the bond's price will be over time.

Basically, the longer the duration -- expressed in years -- the more volatile the price. So a 1% change in interest rates will have less effect on the price of a bond with a duration of 2 than it will on the price of a bond with a duration of 5.

References in periodicals archive ?
Namely, the duration of V2 is always less than that of V3 (by one-way ANOVA the difference between V2 and V3 is significant [F(1,90) = 10.72, p < 0.05]).
The study was conducted on 100 subjects, among which 50 were Type 2 diabetic with duration of diabetes being 5 years or more and the rest were Type 2 diabetic with the duration of diabetes being <5 years.
Table-II: Progression of albuminuria with duration of diabetes mellitus.
Interrupted time series and least squares were used to compare the variation tendency of sleep duration in elder age group (≥11 years) and younger age group (<11 years); Interactions were introduced with combinations of age and age groups.
Flight duration: 4 hours Price: Dh3,000 Duration: 4 nights, 5 days
Because duration considers the timing and size of cash flows as well as the discount rate used to calculate the present value of future cash flows, it can be thought of as measuring the weighted average timing of the cash flows generated by a given asset or liability.
There were two primary endpoints of this study, one was to determine the sensitivity and specificity of CRP against blood culture to determine the neonatal sepsis and secondary end-point was to determine the negative predictive value of CRP in determining the duration of antibiotics in neonates presenting with sepsis.
In our study, the subjects were divided into 4 groups on the basis of duration of diabetes.
There are two principal explanations for duration dependence.
The authors reported a cross-sectional study on the association between total sleep duration and having metabolic syndrome (MS) among male police officers aged 20-60 years old.
Web site performance related to visitor's purchasing decision can be indicated from their visit duration. Traffic sources have different impact on visit duration.