Home >  Term: Effective duration
Effective duration

The duration calculated using the approximate duration formula for a bond with an embedded option, reflecting the expected change in the cash flow caused by the option. Measures the responsiveness of a bond's price-taking into account that expected cash flows will change as interest rates change due to the embedded option.

0 0

Creator

  • Harry8L
  • (London, United Kingdom)

  •  (V.I.P) 574128 points
  • 100% positive feedback
© 2026 CSOFT International, Ltd.