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    Question

    The duration of a bond is a measure of

    its:
    A Credit risk Correct Answer Incorrect Answer
    B Interest rate sensitivity Correct Answer Incorrect Answer
    C Liquidity Correct Answer Incorrect Answer
    D Tax status Correct Answer Incorrect Answer

    Solution

    Bond duration measures the sensitivity of a bond's price to changes in interest rates. It is expressed in years and indicates the weighted average time to receive the bond's cash flows.

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