The shorter the time to maturity, the less sensitive a bond's price will be to changes in interest rates.

Question

Quizplus · Accepted Answer

This is a basic principle of bond investing and is commonly referred to as the "duration" of the bond. A bond with a shorter time to maturity will have a lower duration, which means that it will be less affected by changes in interest rates. This is because the bond's cash flows (i.e. the coupon payments and principal repayment) will be received sooner and there is therefore less time for interest rates to change and affect the bond's value.

The Shorter the Time to Maturity, the Less Sensitive a Bond's