Editing Stock duration (section)

== Price sensitivity versus duration ==
The price sensitivity of a stock versus duration, often called modified duration, is the percentage change in price in response to a 1% change in the long-term return that the stock is priced to deliver.
The modified duration is duration divided by (1 + growth rate). There is some ambiguity in the literature when referring to duration; much of the time modified duration is referred to simply as "duration", and they have similar values, so much confusion results.
=== Convexity ===
The modified duration formula assumes a linear relationship between percent change in return and percent change in price; but because returns compound, it overestimates the actual change in price.  This difference is called "convexity".