Glossary / Wealth and risk
Duration
Duration measures how sensitive a bond's price is to changes in interest rates. As a rule of thumb, for each one-percentage-point change in rates, a bond's price moves in the opposite direction by roughly its duration, in percent.
Written by Antevo · 15 September 2026
See it in practice01 / In practice
Illustrative only, with invented round numbers. A fictional CHF-based household holds bonds worth CHF 500,000 with a modified duration of 6. If yields rise by one percentage point, from 2% to 3%, the estimated price change is −6 × 1% = −6%, or about −CHF 30,000, leaving roughly CHF 470,000. If yields fell by one point, the estimate would be about +CHF 30,000. Modified duration comes from Macaulay duration: a bond with a Macaulay duration of 6.12 years and a 2% annual yield has a modified duration of 6.12 ÷ 1.02 = 6.0. The estimate is a straight-line approximation; for larger rate moves the true price change differs.
Formula. Macaulay duration = weighted-average time to receipt of a bond's cash flows, each weighted by its share of the bond's present value. Modified duration = Macaulay duration ÷ (1 + yield per period). Approximate % price change ≈ −modified duration × change in yield (percentage points).
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Primary sources for the definition above. Intelligence, not advice: your adviser or counsel confirms anything a decision rests on.