Categories: Ratio

What is Bond Duration? An Overview for Forex Traders

A bond’s duration is an important measure of determinining how much an investor should expect to gain or lose from a given bond. It provides an indication of the bond’s sensitivity to changes in interest rates. Bonds with longer maturities or higher coupons have higher durations, while bonds with shorter maturities or lower coupons have lower durations. Generally speaking, the longer the duration, the more sensitive the bond will be to changes in interest rates. For example, if interest rates rise, a bond with a higher duration will experience greater capital losses compared to a bond with a lower duration.

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