SynopsisIf you are confused by personal finance terms, jargon and calculations, here’s a series to simplify and deconstruct these for you. In the 115th part of this series, Riju Mehta explains the difference between these bond durations.What is bond duration?Bond duration is the time it takes for an investor to recover the bond price, including both interest and principal, through its cash ows. Duration should not be confused with the bond’s maturity term, which is the period from its issue date till the entire principal is repaid on maturity.Duration also indicates how much a bond’s price may change with varying interest rates. Bond prices have an inverse relationship with interest rates, with a rise in rates leading to a fall in prices, and vice versa. Bonds with higher duration are more sensitive to interest rate changes and those with shorter duration are more stable.Macaulay and modi ed durations are the two most widely used measures which serve different purposes.Bond duration: How the two differ