Bonds, Interest Rates & Exchange Rates

How do you estimate bond price changes using duration?

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Modified duration indicates roughly what percentage a bond's price changes when interest rates change by 1 percentage point.

For example, for a bond with a modified duration of 5, you can approximate that its price will fall about 5% if rates rise by 1 percentage point. Modified duration is obtained by dividing Macaulay duration by (1 + yield to maturity).

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This answer is general financial information as of 14/10/2569, not investment advice. Rules and tax rates change, so please also check the latest guidance from the source institution.