The duration of a credit default swap (CDS) is the time over which the swap remains in effect, where the two parties, the protection seller and protection buyer, discharge their respective contractual obligations until maturity date. CDS duration ranges from one to ten years. Typically, a term of five years is the norm in the credit transfer market.
In this context, duration is defined in general terms- i.e., it denotes the meaning of “term” or lifespan. However, in finance, duration is specifically defined as a measure of price sensitivity of a debt instrument such as a bond to changes in interest rate.
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