Bond Duration Calculator
Calculate the Macaulay duration and modified duration of a bond to measure its interest rate sensitivity. Modified duration estimates how much a bond's price will change for a 1% change in yield.
Bond Duration Calculator
FAQ
What is Macaulay duration?
Macaulay duration is the weighted average time to receive all of a bond's cash flows, measured in years. Each cash flow is weighted by its present value relative to the bond's total price.
What is modified duration?
Modified duration adjusts Macaulay duration for the bond's yield level. It directly estimates the percentage change in a bond's price for a 1% change in yield. A modified duration of 7 means prices drop about 7% for a 1% yield increase.
Why is duration important for bond investors?
Duration helps investors understand and manage interest rate risk. Bonds with longer durations are more sensitive to rate changes, making duration essential for portfolio immunization and risk management strategies.