Macaulay Duration is a calculation of how sensitive a bond's price is to changes in interest rates.
What is Macaulay Duration?
- The Macaulay duration is the weighted average term to maturity of a bond's cash flows. The weight of each cash flow is calculated by dividing its present value by its price. Portfolio managers who use an immunization strategy frequently use Macaulay duration.
- Frederick Macaulay proposed this idea. The weighted average time before repayment or the time when cash flow is received is referred to as duration. Duration attempts to calculate how long it will take an investor, in years, to recoup the bond's price from the bond's total cash flows.
- Bonds with longer maturities carry more risk and, as a result, have higher price volatility than bonds with shorter maturities.
To learn more about Macaulay Duration refer to :
https://brainly.com/question/29769189
#SPJ4
