Definition:
Duration
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Duration is a present-value weighted measure of the maturity of an individual security or portfolio of securities.When calculating duration, the timing and amount of all cash flows expected from the security or portfolio are considered.
For example, a bullet loan in which all the principal is due at maturity will have a longer duration than an amortizing loan with the same maturity rate. This is because more of the amortizing loan is repaid in earlier periods.
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