Dollar Duration

The dollar duration is a method of measuring the sensitivity of a bond's price to the change in its yield.

The dollar duration is an approximate estimation used by bond fund managers to give them a sense of how risky bond portfolios are. Since it's a linear measurement, and bond price sensitivity in interest rate changes is not linear...it's just one of many guesstimates for measuring bond duration. Because there are lots of assumptions wrapped up in this simple, linear calculation, take the dollar duration with a pinch of salt (shaken, not stirred).