Proportional sensitivity of bond price to yield, measured in years. Macaulay duration is the cash-flow-weighted average time-to-receipt D_Mac = sum_i t_i · dfracPV(CF_i)P; modified duration D_mod = D_Mac/(1 + y/k) gives the first-order price approximation Δ P / P ≈ -D_mod,Δ y. DV01 (dollar value of one basis point) = P · D_mod · 10^-4 is the trading-desk currency. Effective duration uses bumped pricing — the correct measure for callable/MBS bonds whose cash flows are rate-dependent.