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Economics

Duration vs. Maturity

Quick fact

A zero-coupon bond has a duration exactly equal to its maturity, but for coupon-paying bonds, duration is always less than maturity—sometimes significantly less.

Why this is interesting

You buy a 10-year bond, expecting your money back in a decade. But did you know that if interest rates rise just 1%, your bond could lose more value than a 30-year bond with a later maturity? Why would a shorter-term bond be riskier?