What Is Bond Duration?
Duration measures how sensitive a bond's price is to changes in interest rates. The rule of thumb for using it, what makes duration higher or lower, and what it doesn't tell you.
In one sentence
Duration. A measure of how sensitive a bond's price is to interest rate changes. A duration of 6 means a price change of roughly 6% for each 1-point move in rates.
How it works
The higher the duration, the more sensitive the bond. As a rule of thumb, for every one-percentage-point change in interest rates, a bond's price moves in the opposite direction by roughly its duration, as a percentage. A bond with a duration of 10 would be expected to fall about 10% if rates rose one point, and a bond fund with a duration of 2 about 2%.1
| Holding | Duration | Rough price change |
|---|---|---|
| Short-term bond fund | 2 | About −2%, or −$200 |
| Intermediate bond fund | 6 | About −6%, or −$600 |
| Long-term bond fund | 16 | About −16%, or −$1,600 |
If rates fall instead, the same holdings gain by roughly the same amounts.
What sets it
FINRA gives two rules: the longer the maturity, the higher the duration, and the higher the coupon, the lower the duration.1 Bond funds publish their duration on the fact sheet, which makes it the quickest way to judge how much a fund could move when rates change.
Learn it properly
- Duration and the Yield CurvePart 2: What You Can Own
Notes and sources
- FINRA. Brush Up on Bonds: Interest Rate Changes and Duration. Checked 2026-10-12. Back to text