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How to Calculate Modified Duration

By Motley Fool Staff – Updated Apr 29, 2025 at 10:58PM

Key Points

  • Modified duration shows bond price sensitivity to yield changes; a 1.859% price change per 1% yield shift.
  • Macauley duration measures average time to receive bond cash flows, key for calculating modified duration.
  • High modified duration increases a bond's interest rate risk, crucial in rising-rate environments.
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