Episode Summary Why do two bond portfolios of identical credit quality and coupon rates experience wildly different price declines when interest rates shift? The answer lies in duration, a single, highly powerful metric that measures how sensitive any bond's price is to interest rate swings. This episode breaks down the dual definitions of duration, the three structural factors that dictate it, and how investors can use this number to match their portfolio to their actual investment horizon.

Key Concepts

• The Dual Definition: Duration is simultaneously the mathematical sensitivity of a bond's price to interest rate changes (e.g., a duration of 5 means roughly a 5% price change for every 1% shift in yields) and the weighted average time ...