Modified Duration (SOA Exam FM - Financial Mathematics - Module 4, Section 3, Part 2)

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SOA Exam FM (Financial Mathematics) Module 4, Section 3, Part 2
After completing this video you should be able to:
- Define and recognize the definitions of the following terms: duration (Macaulay and modified)
- Calculate:
• The duration and convexity of a set of cash flows.
• Either Macaulay or modified duration given the other.
Definition given in the video:
The Macaulay duration of a set of payments is the weighted average of the times of the payments, where the weight of the payment at time 𝑡 is equal to the present value of the payment at time 𝑡 divided by the present value of all the payments. (An interest rate must be given in order to get a numeric value.)

[@jamesjames8805]

great content. can you explain it using examples instead of just formulas ?

[@TroubleMakery]

Watch the video for section 3 part 1