Effective Duration Explained: Definition, Formula & Calculator
Effective Duration: The Most Accurate Measure of Interest Rate Risk Explained Effective duration is one of the most important tools in modern fixed-income analysis. Unlike Macaulay or Modified duration, which assume fixed and predictable cash flows, Effective Duration measures the interest rate sensitivity of bonds with embedded options—such as callable bonds, putable bonds, mortgage-backed securities, […]
Modified Duration Explained: Definition, Formula & Bond Price Sensitivity Guide
What Is Modified Duration? A Complete Expert Guide for Bond Investors Understanding how a bond reacts to changes in interest rates is one of the most critical skills in fixed-income investing. While Macaulay Duration measures the weighted average time of cash flows, Modified Duration goes a step further — it quantifies how sensitive a bond’s […]
What Is Macaulay Duration? Definition, Formula, and Example
What Is Macaulay Duration? A Complete Guide for Bond Investors Understanding bond risk is essential for making sound investment decisions—especially when interest rates are changing. One of the most powerful tools for measuring a bond’s sensitivity to interest-rate movements is Macaulay Duration. Although often overlooked by beginners, duration is a core concept used by professional […]
Internal Rate of Return (IRR) Explained | How to Calculate IRR + Free Calculator
Internal Rate of Return (IRR): What It Is and How to Use It in Investment Decisions Internal Rate of Return (IRR) is one of the most widely used financial metrics for evaluating the profitability of investments, business projects, and long-term capital decisions. It helps investors determine whether future cash flows justify the initial cost and […]
Net Present Value (NPV) Explained – Free NPV Calculator
Net Present Value (NPV) – Complete Guide for Investors Net Present Value (NPV) is a key financial metric used to evaluate the profitability of an investment or project. It measures the difference between the present value of future cash flows and the initial investment. By considering the time value of money, NPV allows investors to […]
Bond Accrued Interest & Dirty Price Explained
Bond Accrued Interest & Dirty Price Explained When buying or selling bonds between coupon payment dates, investors often come across two important terms: accrued interest and dirty price. Understanding these concepts is essential for accurate pricing and return calculations. This guide explains how accrued interest and dirty price work — and includes a free Bond […]
Mastering Coupon Bonds: Essential Insights for Investors
Mastering Coupon Bonds: Essential Insights for Investors Coupon bonds serve as a foundational element in building a stable investment portfolio, delivering consistent payouts alongside the return of your initial investment at the end. For those new to finance or refining their strategies, grasping these instruments can unlock smarter choices. At FinanceFriend24, we demystify investing with […]
Understanding Zero-Coupon Bond Yield
Zero-Coupon Bond Yield Explained: How to Calculate and Analyze Your Returns A complete guide to understanding the yield on zero-coupon bonds and how to calculate it accurately. What Is a Zero-Coupon Bond? A zero-coupon bond is a type of fixed-income investment that doesn’t pay periodic interest (also called coupons).Instead, investors purchase it at a discounted […]