## Duration, Modified Duration, Price Value of a Basis Point (PVB), DV01 and Convexity

### Definition

The duration of a bond or other series of cashflows is the weighted average life of the cashflows, using the present value of each cashflow as its weighting.

The modified duration of a bond or other series of cashflows is the proportional change in its price, relative to a change in yield.

The price value of a basis point (PVB), or dollar value of an 01 (DV01), is the price change in an investment arising from a 1-basis-point change in yield.

The convexity of an investment is a measure of the curvature of its price/yield relationship – an indication of the extent to which its value does not change in direct proportion to yield.

### How are they used? ...