Why is the same Greek word for Covenant sometimes translated Testament?

In the Greek, the same word (diathēkē) can be translated as either ‘testament’ or covenant’, so we need to look carefully at the context to determine what it should be. Hebrews 9:16 shows us that the word “covenant” can also be translated, “Testament” since the same word is used to indicate that because the death of the testator has occurred, a will is in effect. 

Heb 9:16  For where a testament is, there must also of necessity be the death of the testator. 

Heb 9:17  For a testament is of force after men are dead: otherwise it is of no strength at all while the testator liveth. 

The word is either speaking of a covenant when two parties are involved with obligations on both, or a testament when one party is bequeathing an inheritance to another.  

The KJV uses the word “testament” in 2 Corinthians 3 2Co_3:6, rather than covenant, to describe the ministry. This is because the Apostles, being stewards of the mysteries of God for His household, are distributed the riches of Christ as an inheritance for the saints (1 Cor 4:1,2; 1 Peter 4:10)

2 Cor 3:6  Who also hath made us able ministers of the new testament; not of the letter, but of the spirit: for the letter killeth, but the spirit giveth life.

Another word that is translated differently in the English according to context is Oikonomia. In the KJV, it is translated as: fellowship, communion, administration, dispensation, stewardship. It has to do with the riches in God’s household being distributed to the heirs. Consider Paul’s own description of his ministry as a steward of the riches of Christ for the gentile heirs:

Eph 3:2  If ye have heard of the DISPENSATION (oikonomia) of the grace of God which is given me to you-ward:…Eph 3:6  That the Gentiles should be fellow HEIRS, and of the same body, and partakers of his promise in Christ by the gospel:  Eph 3:7  Whereof I was made a minister, according to the gift of the grace of God given unto me by the effectual working of his power. Eph 3:8  Unto me, who am less than the least of all saints, is this grace given, that I should preach among the Gentiles the unsearchable riches of Christ; Eph 3:9  And to make all men see what is the FELLOWSHIP (OIKONOMIA – DISPENSATION, ADMINISTRATION, STEWARDSHIP, ETC) of the mystery, which from the beginning of the world hath been hid in God, who created all things by Jesus Christ: