Modified Duration rate

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May 30, 2019 at 3:58 pm #517950
aamir2111
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Dear Tutor,

As per lec notes, “The Modified Duration measures the sensitivity of the market value of a bond to changes in interest rate”. What are these interest rate? the future investor’s required rate of interest, isn’t it?
May 30, 2019 at 4:18 pm #517957
John Moffat
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Correct – the investors required rate of return (which is, of course, dependent on what happens to general interest rates).
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