Modified duration measures interest rate sensitivity: it estimates how much a bond's price changes when yields move. A duration of 5.0 means a 1% yield increase causes roughly a 5% price drop. This is a first-order (linear) approximation — it works well for small yield changes but becomes less accurate for large moves (where convexity matters). For example, if a bond has modified duration of 7.2 and yields rise 0.5%, expect price to fall about 3.6% (7.2 × 0.5%). Textbooks often derive modified duration from Macaulay duration as MacDur / (1 + y/m). In practice, Strata computes it numerically using symmetric finite difference: the bond is repriced at yield ± 1bp and the slope of the price-yield curve is estimated from the two prices. This numerical approach handles irregular cash flows, odd first coupons, and day-count conventions that the closed-form formula cannot.