duration

In finance, duration measures how sensitive a bond's price is to changes in interest rates. Think of it as the approximate time it takes for an investor to recoup their investment through bond payments. A higher duration indicates greater sensitivity, meaning the bond's price will fluctuate more with interest rate changes. It also provides insight into the bond’s risk and help investors gauge how interest rate movements might impact their investment value over time. Essentially, duration is a useful tool for understanding and managing the potential price volatility of bonds in varying interest rate environments.