duration

A measure of of how a bond's price will react to changes in interest rates. Duration is the average time it takes to receive all the cash flows from a bond, weighed by the present value of each cash flow. It considers both the time to maturity and periodic coupon payments until maturity in its calculation. The longer the time to maturity and the lower the coupon rate, the greater the duration. If a bond pays no coupon (zero-coupon bond), its duration is equal to its years to maturity.