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Economics

Bond Duration

Quick fact

Duration is measured in years but is not the same as maturity; a zero-coupon bond's duration equals its maturity, while a coupon bond's duration is shorter due to early cash flows.

Why this is interesting

Did you know that a 10-year bond might actually be less sensitive to interest rates than a 5-year bond? The secret lies in duration, a measure that reveals the true risk hidden in bond cash flows.