Angie · learn
Duration
How much a bond's price moves for a one-point change in rates. A duration of 7 means roughly a 7 percent fall if yields rise a point.
Updated 2026-09-05
Duration measures how much a bond's price moves when interest rates change. A duration of 7 means roughly a 7 percent price fall if yields rise by one percentage point.
The concept extends well beyond bonds and it is worth carrying across. A growth company whose value sits mostly in distant cash flows is a long-duration asset, and it reacts to rate changes the way a long bond does. That is the precise reason a rise in the risk-free rate rate hits high-multiple growth names hardest.
See also
- Bond — A loan to a company or government, repaid on a fixed schedule with interest. You are a creditor, not an owner, and you get paid before shareholders.
- Yield to maturity — The total return on a bond held to the end, counting both interest and the pull toward face value. It is the bond's internal rate of return.
- Risk-free rate — The 10-year Treasury yield, standing in for the return available with essentially no risk. Every other rate in the model is built on top of it.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
