Tag: macaulay duration

Macaulay duration is a measure of the sensitivity of the price of a bond or asset to changes in interest rates. It is calculated by dividing the weighted average term of cash flows from an asset by the sum of the present value of the cash flows from the asset. Macaulay duration measures are expressed in years and can help investors make decisions regarding their assets and bond portfolios. Macaulay duration can also be used to predict the price change of a bond in response to a change in interest rate, as it takes into account both maturity and coupon payments. With Macaulay duration, investors can plan and manage their investments more effectively and make well-informed decisions.

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Macaulay Duration: Basics of Forex Trading for Beginners

Post Author By Lena K. Bradley
Post Date August 14, 2023

5 min read

Macaulay duration is an important tool used by forex traders to measure the sensitivity of a bond’s overall duration to changes in interest rates. This measure can be used for both individual and country-level duration assessment. Macaulay duration works by calculating the present value of the coupon payments of the bond, when discounted using the current yield on the bond. The value obtained is then divided by the bond’s face value to determine the Macaulay duration. By assessing the Macaulay duration of a bond, forex traders can measure the sensitivity of the bond’s duration to changes in interest rates, as well as its value over time.