What does duration measure in terms of bonds?

Duration is a key concept in bond investing that specifically measures the sensitivity of a bond's price to changes in interest rates, which relates directly to price volatility. When interest rates rise, bond prices typically fall, and duration quantifies this relationship by indicating how much the price of a bond is expected to change in response to a change in interest rates.

Longer duration implies greater sensitivity to interest rate changes, meaning that if interest rates increase, the price of a bond with longer duration will decrease more than a bond with shorter duration. This is crucial for investors as it helps them manage the interest rate risk associated with their bond investments, allowing them to balance their portfolios according to their risk tolerance and interest rate outlook.

The other options speak to different characteristics of bonds but do not accurately define what duration measures. For example, while duration does relate to the time until cash flows occur, it is not simply the time until maturity, nor is it a measure of coupon payment frequency or solely the interest rate risk in isolation.