The higher the coupon rate, the lower the duration, and the lower the interest rate risk. To understand modified duration ... This is true because, by definition, the current price of a bond ...

The table below shows how this number can be calculated: What does this modified duration mean? If interest rates increase by 1%, the price of our hypothetical three-year bond will decrease by 2.67%.

Bond duration is a measurement that tells us how much a bond’s price might change if interest rates fluctuate. Its full definition is ... duration an attractive investment in an environment ...