The "modified duration" used by practitioners is equal to the Macaulay duration
A) times the change in interest rate.
B) times (one plus the bond's yield to maturity).
C) divided by (one minus the bond's yield to maturity).
D) divided by (one plus the bond's yield to maturity).
E) none of these.

Question

Quizplus · Accepted Answer

Modified duration is defined as Macaulay duration divided by (1 + y) where y is the bond's yield to maturity. Therefore, the modified duration is equal to the Macaulay duration divided by (1 + y), which corresponds to choice D.

The "Modified Duration" Used by Practitioners Is Equal to the Macaulay