Looking at sensitivity of price changes, we could look at these four examples. First, we could look at the initial price. If you look at the yield and coupon of the first two columns, you'll see that they match each other. And you'll also notice that the price is 100 in both cases. The yield represents what the yield of the bond will be. And the coupon represents the actual payout of interest throughout the lifetime of the bond. If the expectation of a bond is 5% and the coupon is 5%, then it's matching its expectation. This will be accompanied by an exactly par price of a hundred. You could see the third bond is performing way above expectation. Its coupon is 20, and the expectational yield, only needs to be 5. This means the price that people will be willing to pay for this bond would be higher. If we move down in diagram, you can see that some of the yields, all of the yields have changed to 6%. This means that the expectation of yield has risen by 1%. And the way that the bond will change in response to this, is that the price will go down. The investor would need to pay less to achieve the same yield. Looking at the four bonds, you can see the price drop percent at the bottom of the diagram, varies for each. And you may notice that the longer dated bonds appear to have the greater response to the change in yield. You might also spot that the second and third bond, which have the same maturity, still differ. and that's because the initial coupon is different, which also affects the percentage price drop. This concept of percentage price drop in response to yield percentages is called duration. For single cash flow bonds such as zero coupon bonds, the duration is the same as the time to maturity. Relatively simple. A one-year zero coupon bond has a duration of one. This type of duration is called Macaulay duration. Measures the average time to receiving the cash flows of the bond. The longer the bond, the longer the duration, and the more sensitive the bond is to changes in interest rates. Duration for bonds with more than one cashflow however, are much more complex.