Glossary of Municipal Securities Terms

DURATION

A measure of the timing of cash flows (i.e., theĀ interest payments and theĀ principal repayment) to be received from a given fixed income security. Duration is used to assess price volatility for given changes in interest rates, the reinvestment risk associated with a given portfolio or the interest rate risk associated with matching particular interest-rate-sensitive assets and liabilities. Compare: CONVEXITY.

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