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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Modified duration
Hi sir,
In the topic of modified duration you write in your lectures
CHANGE IN MARKET value of a bond= change in interest rates × modified duration
But in your notes
It has been stated that
Change in market value =MODIFIED DURATION × CHANGE IN INTEREST RATES × (orignal) VALUE OF BOND
Which one is it ?
Thanks
Both 🙂
The first expression gives the change as a %’age.
The second expression gives the change in $’s.
Thankyou sir
You are welcome 🙂