Bonds & rates
Modified duration
Duration adjusted for the bond’s own yield, giving a direct estimate of price sensitivity.
How it works
Macaulay duration measures the weighted average time to receive cash flows. Modified duration converts that into the percentage price change per 1% yield move, which is what practitioners use.
Formula
Modified duration = Macaulay duration ÷ (1 + yield per period)Related terms
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Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.