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    • 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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