Duration (also known as Macauley duration) is the average period of capital commitment. Unlike the simple term to maturity, it takes account of the varying coupons on the bonds, which naturally react in different ways to changes in interest rates.
The greater the duration, the stronger the effect of changes in interest rates on the bond price in both the positive and negative sense.
Duration analysis can be applied to entire bond portfolios. It can also be used to hedge bonds against adverse interest rate developments.