## Fixed income instrument

Finance Junkie
Posts: 166
Joined: Mon Oct 06, 2014 7:36 am

### Fixed income instrument

Wat does this means???????
Money duration of per 100 of bonds par value

edupristine
Finance Junkie
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Joined: Wed Apr 09, 2014 6:28 am

### Fixed income instrument

Modified (or effective) duration measures the percentage price change for a 1% change in the yield to maturity (YTM)

Dollar (or money) duration measures the dollar (or other currency) price change for a 1% change in YTM

So, if you have a \$1,000,000 portfolio with a modified duration of 5 years and YTM increases 0.1%, then its dollar duration (money duration) is \$1,000,000 × 5 years = 5,000,000 (dollar-years), its (approximate) percentage price change is -5 × 0.1% = -0.5%, and its (approximate) dollar change is -\$5,000,000 × 0.1% = -\$5,000.

Finance Junkie
Posts: 166
Joined: Mon Oct 06, 2014 7:36 am

### Fixed income instrument

what does basically per 100 of par value means over here

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am
When you encounter terms like "per 100 of par value", you simply need to multiply dollar duration by 100 to get the money duration for entire par value of bonds.
If you need more clarification, please give me the question where you have encountered this statement.