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Yield sensitivity measures how much a bond's price changes when interest rates fluctuate.

✅ Bonds and interest rates have an inverse relationship: when interest rates rise, bond prices fall, and vice versa.

✅ Bond characteristics like maturity, coupon rate, and yield to maturity affect sensitivity.

✅ Longer maturity, lower coupon rates, and lower yield bonds are more sensitive to interest rate changes.

✅ Duration measures a bond's sensitivity to interest rate changes.

✅ Investors can manage interest rate risk by adjusting bond maturity, diversifying their portfolio, or using interest rate derivatives.

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