Application of Derivatives - Allison case gives Macaulay and Modified Duration. I used modified (guess work), but there is no explaination why not use Macaulay?
Any reason?
Application of Derivatives - Allison case gives Macaulay and Modified Duration. I used modified (guess work), but there is no explaination why not use Macaulay?
Any reason?
I suggest to use the MDUR. I have the feeling that the CFAI prefers it.
Macaulay duration doesn’t measure interest rate sensitivity.
Do you envision any need to use it on the exam or is it purely a distractor?
I don’t, but I’m in Toronto at the moment, away from my Level III curriculum; I’d rather skim that before saying for certain.