duration

noun
du·ra·tion | \du̇-ˈrā-shən also dyu̇- \

Definition of duration 

1 : continuance in time gradually increase the duration of your workout

2 : the time during which something exists or lasts were there for the duration of the concert

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Examples of duration in a Sentence

You should gradually increase the duration of your workout. for the whole duration of the speech the bored audience fidgeted

Recent Examples on the Web

That scene features participants and enthusiasts who were often young, black or Latino and gay or transgender and took on fictitious personas that elevated their status into the stratosphere — if only for the duration of the ball. Melissa Magsaysay, latimes.com, "Strike a 'Pose.' Here's a look at the fashion from Ryan Murphy's FX drama," 12 July 2018 Unfortunately, her prodigious effort has resulted in little more than a repugnant showcase for her acting talents that few viewers will be able to stomach for the duration of its running time. Frank Scheck, The Hollywood Reporter, "'Eat Me': Film Review," 5 July 2018 That sent DTE Energy down to the bottom 25%, or fourth quartile, in rankings for the duration of its outages. Bill Laitner, Detroit Free Press, "History of power outages riles metro Detroiters, DTE promises fixes," 28 June 2018 The organization also believes the testing is too limited in scope, too short in duration and suffers from flawed methology. Kyle Mizokami, Popular Mechanics, "The Long Awaited A-10 vs.-F-35 Flyoff Is Off to a Sketchy Start," 11 July 2018 The 10 new sailings, between December 2019 and February 2020, will vary widely in duration, from three- and five-day getaways to 14- and 15-day trips to Hawaii. Lori Weisberg, sandiegouniontribune.com, "Carnival Cruise Line returning to San Diego after leaving in 2012," 28 June 2018 Almost like the number of strands on my head had multiplied in the duration of my seven-minute shower. Sarah Kinonen, Allure, "Apothecare Essentials The Booster Shampoo Gave My Fine, Flat Hair Major Volume," 18 May 2018 Fix-and-flip loans are usually 12 to 18 months in duration, and generally come with higher interest rates than traditional 30-year mortgages. Jeff Andrews, Curbed, "How Wall Street, Silicon Valley institutionalized home flipping," 9 May 2018 The texts sent between Page and Strzok are dated between August 2015 and December 2016, the duration of the campaign. CBS News, "FBI's Peter Strzok testifies on anti-Trump bias before House panel -- live updates," 12 July 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'duration.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of duration

14th century, in the meaning defined at sense 1

History and Etymology for duration

see durance

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Phrases Related to duration

for the duration

Statistics for duration

Last Updated

9 Oct 2018

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The first known use of duration was in the 14th century

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More Definitions for duration

duration

noun

Financial Definition of duration

What It Is

Duration is a measure of a bond's sensitivity to interest rate changes. The higher the bond's duration, the greater its sensitivity to the change (also know as volatility) and vice versa.

How It Works

There is more than one way to calculate duration, depending on one's compounding assumptions, but the Macaulay duration (named after Frederick Macaulay, an economist who developed the concept in 1938) is the most common. The formula is:

where:
t = period in which the coupon is received
C = periodic (usually semiannual) coupon payment
y = the periodic yield to maturity or required yield
n = number periods
M = maturity value (in $)
P = market price of bond

The formula is complicated, but what it boils down to is: Duration = Present value of a bond's cash flows, weighted by length of time to receipt and divided by the bond's current market value. For example, let's calculate the duration of a three-year, $1,000 Company XYZ bond with a semiannual 10% coupon.

Notice in the table above that we first weighted the cash flows by the periods in which the occurred and then calculated the present value of each of these weighted cash flows (also, a measure of 5% is used instead of 10% because payments are semiannual).

To calculate the Macaulay duration, we then divide the sum of the present values of these cash flows by the current bond price (which we are assuming is $1,000):

Company XYZ Macaulay duration = $5,329.48 / $1,000 = 5.33

As mentioned earlier, duration can help investors understand how sensitive a bond is to changes in prevailing interest rates. By multiplying a bond's duration by the change, the investor can estimate the percentage price change for the bond. For example, consider the Company XYZ bonds with a duration of 5.53 years. If for whatever reason market yields increased by 20 basis points (0.20%), the approximate percentage change in the XYZ bond's price would be:

-5.53 x .002 = -0.01106 or -1.106%

Note that this is an approximation. The formula assumes a linear relationship between bond prices and yields even though the relationship is actually convex. Thus, the formula is less reliable when there is a large change in yield.

In general, six things affect a bond's duration:

Bond's Price: Note that if the bond in the above example were trading at $900 today, then the duration would be $5,329.48 / $900 = 5.92. If the bond were trading at $1,200 today, then the duration would be $5,329.48 / $1,200 = 4.44.
Coupon: The higher a bond's coupon, the more income it produces early on and thus the shorter its duration. The lower the coupon, the longer the duration (and volatility). Zero-coupon bonds, which have only one cash flow, have durations equal to their maturities.
Maturity: The longer a bond's maturity, the greater its duration (and volatility). Duration changes every time a bond makes a coupon payment. Over time, it shortens as the bond nears maturity.
Yield to Maturity: The higher a bond's yield to maturity, the shorter its duration because the present value of the distant cash flows (which have the heaviest weighting) become overshadowed by the value of the nearer payments.
Sinking Fund: The presence of a sinking fund lowers a bond's duration because the extra cash flows in the early years are greater than those of a bond without a sinking fund.
Call Provision: Bonds with call provisions also have shorter durations because the principal is repaid earlier than a similar non-callable bond.

Why It Matters

Understanding the duration formula is not nearly as important as understanding that duration is a measure of risk because it has a direct relationship with price volatility. The greater duration of the bond, the greater its percentage price volatility.

By providing a way to estimate the effect of certain market changes on a bond's price, duration can help you choose investments that might better meet your future cash needs. Duration also helps income investors who want to take on minimal interest rate risk (that is, they believe interest rates might rise) understand why they should consider bonds with high coupon payments and shorter maturities.

[Use our Yield to Maturity (YTM) Calculator to measure your annual return if you plan to hold a particular bond until maturity.]

Source: Investing Answers

duration

noun

English Language Learners Definition of duration

: the length of time that something exists or lasts

duration

noun
du·ra·tion | \du̇-ˈrā-shən, dyu̇-\

Kids Definition of duration

: the time during which something exists or lasts The illness is of short duration.

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