Glossary

Duration

A measure of a bond's price sensitivity to interest rates: roughly the percentage price change for a one-point change in rates, in the opposite direction.

Comparison Estimated price changes for a one-point rate rise at durations of 2, 7 and 15. Duration 2 Rates +1 pt ≈ −2% Duration 7 Rates +1 pt ≈ −7% Duration 15 Rates +1 pt ≈ −15%

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