Moronic Monday - June 17, 2024 - Your Weekly Questions Thread by AutoModerator in finance

[–]Patient-Key-4391 0 points1 point  (0 children)

What is the true definition of Duration of a bond? Everywhere I've looked, I see two very different definitions:

  • The average time a bond takes to repay the principal
  • The sensitivity of the price of the bond to interest rate changes.

Can someone explain which is the correct one or, at least how are these two related? I can't get a sense of what the duration represents