Question

The approximate percentage change in a bond’s price for a 1% change in yield to maturity is given by:

A Macaulay Duration Correct Answer Incorrect Answer
B Modified Duration Correct Answer Incorrect Answer
C Convexity Correct Answer Incorrect Answer
D Approximate Duration Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Modified Duration provides the approximate percentage change in a bond’s price for a 1% change in yield to maturity. The Macaulay duration of a bond is a weighted number of periods until the cash flows are to received

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