Bonds & Yield Curves Part 2

Duration, Duration, Duration, and Market Yields

Last week we introduced bonds and how bond pricing works. This week we are going to focus on duration as well as how the market yield is calculated.

Duration is both a very simple concept (sensitivity of a bond’s price to changing interest rates) while also an extremely complex concept as you start getting into how to calculate it and what it means for different types of bonds in the real world.

If you are purchasing bonds, it is important to have some intuition about what duration is and means. Lucky for you, this post will dive in deep and then pull back and tell you why you care and what you really need to focus on.