Definition Definition


Duration refers the average life of an asset or liability, or more technically, the weighted time to maturity using the relative present values of the asset or liability cash flows as weights.

Duration is more complete measure of an asset or liability’s interest rate sensitivity than maturity because it takes into account the time of arrival of all cash flows as well as the asset and liability’s maturity.

Duration is a present-value weighted measure of the maturity within individual security or portfolio of securities in which the timing and amount all expected cash flows expected from the security or portfolio of securities is considered.

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