Written, signed, unconditional, and unsecured promise by one party (the maker or promisor) to another (the payee or promisee) that commits the maker to pay a specified sum on demand, or on a fixed or a determinable date. Promissory notes (such as bank or currency notes) are negotiable instruments.
The Basics Of Bond Duration. Duration tells investors the length of time it will take a bond's cash flows to repay the investor the price he or she paid for the bond. A bond's duration is stated as a number of years and ...
However, higher risk means higher potential reward: A bond with higher duration will have larger gains when interest rates fall than a similar bond with a lower duration. The impact of a change in interest rates on a bondâs price, or its interest rate risk, is measured by the bondâs duration.n the case of a bond with a duration of 8, a 1% rise in market interest rates would cause the bond to decrease in value 8%. Conversely, a 1% fall in interest rate would cause the bondâs value to increase by 8%.