What duration does a short term bond typically cover?

A short-term bond usually covers a time frame that extends from 1 month to just under 5 years. This category of bonds is specifically designed for investors who are looking for lower risk and a solid return on investment over a relatively brief period. They are typically less sensitive to interest rate fluctuations compared to longer-term bonds, making them an attractive option for those who may want to preserve capital while still achieving some level of yield.

The reasoning behind classifying short-term bonds within this range is based on their typical issuance by entities that need to manage liquidity or financing needs effectively, and they often serve as a means for investors to park funds temporarily while earning interest. The shorter duration is key to their appeal, as it provides both flexibility and a quicker turnaround compared to longer instruments.