What makes a bond more or less sensitive to interest rates?
For educational purposes only. Simplified illustrations to help you understand how things work. Not financial, investment or tax advice, and not a recommendation.
Duration measures how much a bond's price reacts to interest rates. Shorter maturity and a higher coupon both lower it. Tap a box.
High couponLow couponShort-termLong-term
Short-term · high coupon
Least sensitiveMost sensitive
If interest rates rise 1%
Price falls about 2.7%
If interest rates fall 1%
Price rises about 2.7%
Calculated for bonds with annual coupons, priced at a 4% yield. Illustrative only.
