DURATION IS A GUIDE TO SELECTING BONDS
Duration determines the economic life of a bond. It is not
expected that you as an individual investor have to necessarily know how to
calculate a bond's duration. Rather, your broker, financial advisor, or
other financial professional can provide this information. However, once
armed with all the right numbers, it is your responsibility to understand that a
bond's duration is a clear indication of its interest rate risk (i.e., how much
it will move in response to changing interest rates.) You can then buy,
sell, or hold bonds according to how you think they will perform.
To learn more about bonds and bond basics, check out our
other tutorials in this series.
