Best Definition of Duration

CFA Level I
#1

Is it wrong to say that Duration is the weighted average amount of time to recieve the present value of the securities cash flows?

Or is it better to say that its the price sensitivity of the security to a changes in yield?

Thanks!

#2

It depends on whether you’re defining Macaulay duration or modified (or effective) duration.

#3

So im guessing Macaulay duration is the former but modified is the latter?

#4

Yup.

#5

Thanks for the help. Appreciate it!

#6

My pleasure.