Duration approximates the change in price of an instrument due to changes in the yield. Alternatively, it is a measure of how rapidly the prices of interest sensitive securities change as the rate of interest changes. For example, if the duration of a security works out to 2 this means roughly that for a 1% increase in interest rates the price of the instrument will decrease by 2%. Positive duration is when prices have an inverse relationship with interest rates; when interest rates increase prices decline. This is the case for most fixed coupon, fixed income instruments and for liabilities with reasonably well defined cash flows. On the other hand, negative duration means that prices have a direct relationship with interest rates, increasing when interest rates increase. Instruments that may have negative durations are interest rate caps, long put options on fixed coupon bonds, etc
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