One of the regular risks, interest bearing instruments like bonds are prone to is the interest rate risk, which is the variation in the value of the instrument in relation to the changes in the common interest rates. The concept of ‘duration’ is the effective path of determining and mitigating the effects of interest rate alternations. It measures the sensitivity of the bond’s value to movements in interest rates and determines in how many years a bond shall repay its fair cost. More information: Read more