Duration and Convexity [Concepts Series]

Duration is a fundamental financial concept, but it’s more part of the fixed income investor toolkit than the equity investors’. For reasons I’ll get into, duration is usually a misleading concept for equity investors, but there are a few cases where that’s changing.

Duration in bond investing refers to two different measures, which are, conveniently, measured roughly the same way:

  1. The weighted average time in the future at which a bond pays its returns — i.e. the number of years from now when you’ll realize half of the net present…