You may have even heard the phrase, “If interest rates rise, bond prices will drop.” Bonds are sensitive to interest rate risk, which means that when interest rates rise, the value of bonds ...

Key rate duration is calculated by applying small shifts to individual points on the yield curve and measuring the resulting change in a bond's price. The formula follows the standard duration ...

Modified duration is a formula that measures the sensitivity ... Conversely, if interest rates decrease by 1%, the price of the bond will increase by 2.67%. Modified duration is important to ...