Bond Duration Explained Simply In 5 Minutes

Thank you, this helped me for my capital market theory course.

Thanks a lot for the amazing explaination.

Thanks for the explanation. Really liked your approach in making it easy to understand.

This is FUCKING AMAZING THANK YOU SO MUCH!

Quick question, isn't modified duration what tells you how the price of a bond reacts to changes in interest rates while duration is the number of years for a bond to repay the investor?

You are combining two measurements of duration.

Macauley is a measurement of time in which, for example, the appreciation gain of the bond due to a decrease in interest rates, is completely off set by the re-investment risk assumed by YTM. YTM assumes that the coupon payments can be re-invested at the YTM, when rates drop, the coupon payments must be reinvested at a lesser rate, this lowers overall YTM. At the same time, the bond appreciates due to the interest rate decrease - raising YTM. The point in time in which these two values are completely off-setting is Macauley Duration.

Modified duration is the sensitivity change to bond prices with a change in interest rates.

I have watched videos of 30- 60 Mins on Duration and none of those explained the meaning and calculation so easy to understand as yours. Thanks man.

This is the only explanation that I ever understood! It’s bothered me decades that I never understood it. Thanks.

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Thank you soooo much, finally got that part! Wish you all the best!

I love you, Ryan! Not in weird way, just a big fan of your teaching😊

Finally someone explain it clearly

Great video. Loved the explanation of the friend owing you money. Would you be able to explain intuitively why bonds with lower yields have higher durations?

The best explanation ever! literally summarised 2 weeks of uni lecture into 5 mins. Brilliant work!

Well explained.Thanks so much.

Personally I think they could have used a better word than "Bond duration" for this. it doesn't make much intuitive sense why the word duration will be used for such a sensitivity calculation.

Finally, I understand

I LOVE YOU!! You explain amazingly. Thanks so much for this amazing content!

Good explanation

life saving love fromhong kong

THANKS A LOT...... GOT CLARITY.. VERY USEFUL FOR MY PROFESSIONAL COURSE❤

Thank you! This really helped me for my level 1 CFA study

Very short and clear explanation

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Wouldn't the 2.75 that you calculate at the end be the modified duration, not the Macaulay duration as it is measuring the % change to a 1% change in interest rates and not measuring the time in years??

So if the Macaualy Duration is 2.5Yr. That means it takes us 2.5 yr to recover our initial investment, and also means if rates go up 1% that our price changes by 2.5%? What confuses me is how the concept of years and % is interchangeable

God bless you this is super helpful

I really enjoyed a discussion of bonds that develops it beyond "if interest rates go up, the price of the bond will go down and vice versa". Thank you!

Thank you 😭

Thank you ☺️

At last!!!someone who actually makes sense..thanks mate!!!

I get how a bond duration tells you its price sensitivity in connection to a change in market interest rates. Doesn't Duration also tell you how long it takes for the investor to get their money back on their investment? If so, what would the 2.75 mean in terms of that?

Thank you for the explanation, you just solved my problem.

Easiest way to understand.....thnk a ton

Great video and done so easy to comprehend. Thank you

Finally I was able to understand how duration is calculated. Thanks for the clear and well-organized explanation.

thank you for the explanation, very well explained

爱你的教程，love from China

Thank you!

Just to be clear, this example would have the bond only paying 1 annual coupon payment right? In reality most bonds pay semi-annual right?

I like how you breakdown everything, it's a lot easier to understand. ty :)

You are the GOAT

So, regard Macaulay duration (not ModMacDur) - can it be thought of as the amount of time to receive your initial purchase price back? Essentially the break even amount of time?

Great Explanation !

太感谢你了！

How can IRS hedge portfolio duration?

Great video btw and you just earned yourself a new subscriber!