Understanding Duration in Fixed Income Valuation

Duration is a measure of the sensitivity of a bond's price to changes in interest rates. It helps investors understand how much the price of a bond will move in response to interest rate changes. Modified duration specifically measures the price volatility of a bond for a 1% change in yield.

If the market interest rates rise, the price of a bond typically falls, and conversely, if interest rates fall, the price of a bond typically rises. Understanding these concepts is crucial for fixed income investing. What is the primary purpose of using duration when valuing fixed income securities?