About Lesson
a. So far, we have discussed the modified duration; it gives us the percentage change in the price of the bond, for every change in the YTM.
b. The money duration, on the other hand, gives us the money change in the price of the bond due to every change in the YTM. It measures the price change in the currency terms, either per 100 par values, versus the actual face value.
c. The money duration is the annualized modified duration times the full price of the bond.
d. If we know the values of money duration and the change in yield, we can calculate the change in the price of the bond as follows: