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Do you know the concept of duration? It is an approximation of how much the price of the bond changes if the interest rate (appropriate for the market in which the bond trades) changes. This is the interest rate is used to discount cash flows. It is common to all the bonds in the same market (e.g. German govis). For various reasons (liquidity, credit risk, ...


You are right that if we exactly want to know the price of a bond after a change in the yield curve, we have to calculate it - and we can. What we can say about duration: it is a linear approximation of the price change if yield change, this works rather fine with plain vanilla bonds but things get more difficult e.g. with callable bonds. keeping the eye ...

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