# Duration- is it number of years

Hi All, I am confused with the word duration is it 1) change in the value of bond due to change in interest rate or 2) number of years for bond to mature. Does it stand for both. I would really appreciate your help. Thanks Nazim

Mainly 1 with a smidge of 2 (but as far as CFAI is concerned, just 1). Don’t forget to sit for the afternoon session as well.

hell, do you have a twin brother that’s taking the exam too??? Make sure he sits the afternoon session as well.

Char-Lee Wrote: ------------------------------------------------------- > hell, do you have a twin brother that’s taking the > exam too??? Make sure he sits the afternoon > session as well. ^ what he (or she) said

skillionaire Wrote: ------------------------------------------------------- > Mainly 1 with a smidge of 2 (but as far as CFAI is > concerned, just 1). > > Don’t forget to sit for the afternoon session as > well. +1

you guys are mean… but yeah +1

guys , be serious, that is a very crucial question ?!

I just dont get this type of post…this is a very basic question right before the exam …you can post on a forum but you cant google the definition of duration? FYI Bond duration is the sensitivity of the bond to change in interest rate, yes it is measured in years but it is not time to maturity. the greater the number is the more sensitive the bond is to change in interest rate… oh yah n please remember to sit the PM session

Neither. Its a state of mind.

pimpineasy Wrote: ------------------------------------------------------- > I just dont get this type of post…this is > a very basic question right before the exam > …you can post on a forum but you cant > google the definition of duration? > > FYI Bond duration is the sensitivity of the bond > to change in interest rate, yes it is measured in > years but it is not time to maturity. the greater > the number is the more sensitive the bond is to > change in interest rate… > > oh yah n please remember to sit the PM session I think the scarier contradiction would be “you can pass levels I and II and you can’t Google a definition”.

well, duration of a zero coupon bond DOES equal maturity but duration absolutely should be thought of as price sensitivity to yield curve change, not a maturity, break even point or other. maybe the poor guy was just having a brain freeze, happens to us all.

Just out of curiosity… does someone have a basic description of why the unit of duration is in years. Not the math behind it, but rather the logic of why its “years” **Intro finance was a looong time ago and this thread got me curious.