Duration
A measure of how much a bond's price changes when interest rates change. As a rule of thumb, a bond with a duration of 10 will lose about 10% of its price if rates rise by 1 percentage point. Longer-maturity bonds have higher durations, which is why they swing the most when central banks move rates.
A 30-year Treasury (duration ≈ 18) lost ~30% in 2022 when rates rose ~2%, while a 2-year bond barely moved.
Duration
This term appears in a longer lesson, where the idea gets the proper treatment with examples and a working visualization.
Read the lesson →Trade-offs
Risk
The chance that an investment loses value, and how much it could lose.
Read →Volatility
How wildly an investment's price moves up and down. High volatility = bigger swings.
Read →Diversification
Spreading money across many different things so no single one can sink you.
Read →Bull & bear market
Long stretches of rising prices (bull) or falling prices (bear). Both end, eventually.
Read →