Glossary term
Duration
A bond's price sensitivity to interest-rate changes; longer duration means larger price swings per unit of rate move.
Duration measures a bond's price sensitivity to interest-rate changes, expressed in years. A duration of 7 means the bond's price falls roughly 7% for each one-percentage-point rise in rates, and rises the same for a fall. Longer-duration bonds carry larger price swings, which is why the 2022 rate shock hit long-dated Treasuries and growth equities hardest. See Convexity and Money Temperature 101.