Summary of Bond Duration

Duration determines the economic life of a bond. It is not expected that you as an individual investor have to necessarily know how to calculate a bond’s duration. Rather, your broker, financial advisor, or other financial professional can provide this information. However, once armed with all the right numbers, it is your responsibility to understand that a bond’s duration is a clear indication of its interest rate risk (i.e., how much it will move in response to changing interest rates.) You can then buy, sell, or hold bonds according to how you think they will perform.