Exploring Macaulay Duration Formula for Forex Trading

3 min read

Macaulay duration is a measure of a bond’s sensitivity to changes in interest rates and is used heavily in the forex market. The Macaulay duration formula is the weighted average of the bond’s payments, accounting for the fact that money received sooner is more valuable than money received later. Generally speaking, the longer the Macaulay duration of a bond, the more sensitive to changes in interest rates it is. This sensitivity makes Macaulay duration a useful tool for investors and traders in the forex market, as it allows them to gauge the risk and potential rewards of any given bond.