What is Bond Duration?

The term of a bond refers to the period from the interest calculation date of the bond to the principal and interest repayment date.

Bond maturity

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The term of a bond refers to the period from the interest calculation date of the bond to the principal and interest repayment date.

Direction of use of funds, changes in market interest rates, bond liquidity

The term of a bond is defined as

Bonds can be divided into long-term bonds, medium-term bonds and short-term bonds according to their length. The term of long-term bonds is more than 10 years, the term of short-term bonds is generally within 1 year, and the term of medium-term bonds is somewhere in between. The longer the maturity of the bond, the slower the turnover of bond holders' funds, which may affect investment income when bank interest rates rise. The longer the maturity of the bond, the higher the investment risk of the bond. Therefore, a higher return is required as compensation, and the bond with a higher yield also has a higher price. Therefore, in order to obtain returns commensurate with the risks suffered, bondholders of course require higher yields on long maturity bonds, so the price of long-term bonds is generally higher than the price of short-term bonds.

From "Bond Investment Novice" Yang Changhan, Zou Zhaohong.