Duration is a measure of a bond’s sensitivity to interest rate changes, reflecting the average time it takes for the bond’s cash flows, including coupon payments, to be repaid. In easy words, duration tells a bond investor how long the price of the bond takes to recover through its repayments, weighted by the present value of those repayments. It is measured in years, and usually, duration increases when the maturity of the bond is increased, and decrease when the coupon rate gets higher. The higher the duration, the more sensitive the bond is to changes in interest rates. For example, a 5-year bond will drop about 5% each time the interest rate increase is 1%.