modified duration quantifies how much a bond’s price will change for a 1% change in bond yields

Illya Gerasymchuk -

2025-08-13 00:23

modified duration quantifies how much a bond’s price will change for a 1% change in bond yields while the bond pays fix sums - its market value/price varies, so its yield is not fixed

Illya Gerasymchuk 2025-08-13 00:23

that's a problem because the market price of the bond may have fallen significantly and the rest of the bond payment - 1.5% coupon + principal needs to be re-financed at potentially unfavorable rates

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