Financial metrics2 min read
DurationGerman: Duration
Duration measures the timing of a bond’s cash flows. Modified duration estimates its sensitivity to interest-rate changes.
In plain language
Higher modified duration typically means stronger price sensitivity to a small change in market yield. The estimate is approximate and assumes other factors remain unchanged.
Let’s make it concrete
With modified duration of 5, a one-percentage-point yield increase implies an approximate 5% price decline. Large changes make the approximation less accurate.
Simplified example for illustration.Worth understanding
Duration is not simply time to maturity. Coupons and payment timing also affect it.
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Financial education for orientation. No individual investment, tax or legal advice.
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