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Macaulay duration is the present-value-weighted average time to receive a bond’s cash flows, expressed in years. It represents the point at which the total present value of future coupon payments and principal repayment equals the bond’s current market price, and is used to assess interest rate risk and align investment horizon with cash flow timing.
A maturity date is the specific date on which the principal and any remaining interest on a bond, loan, or other debt instrument must be fully repaid. It marks the end of the contractual relationship between borrower and lender or investor and issuer, when all financial obligations are settled.
Modified duration is a measure of a bond’s sensitivity to interest rate changes, expressed as the estimated percentage change in the bond’s price for a 1% change in its yield to maturity. It is derived from Macaulay duration and is widely used in fixed income analysis to assess interest rate risk and compare bonds with different coupons and maturities.