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      Question

      Which of the following is correct with respect to

      measurement of sensitivity?
      A This indicates the degree of risk associated with the portfolio against the changes in interest rate Correct Answer Incorrect Answer
      B It does not consider the impact of other parameters Correct Answer Incorrect Answer
      C Sensitivity is more appropriate measurement to measure impact of interest rate changes Correct Answer Incorrect Answer
      D All of the above Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      Sensitivity of a portfolio indicates the degree of risk associated with the portfolio against the changes in interest rate.  Interest rate sensitivity  is a measure of how much the price of a fixed-income asset will fluctuate as a result of  changes  in the  interest rate  environment.

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