The Volatility of a Bond Is Given by

question 59

Multiple Choice

The volatility of a bond is given by

• A)duration/(1 + yield)only.
• B)slope of the curve relating the bond price to the interest rate only.
• C)yield to maturity only.
• D)duration/(1 + yield)and slope of the curve relating the bond price to the interest rate only.

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Definitions:

Discount Rate

This is the rate used during discounted cash flow analysis for evaluating the present value of cash flows anticipated in the future.

Financial Break-even Point

It is the level of revenue necessary to cover a company’s fixed and variable costs, without generating profit or loss.

Degree of Operating Leverage

A financial metric that measures the sensitivity of a company's operating income to changes in its sales, highlighting the effect of fixed costs on profits.

Conventional Cash Flows

Conventional cash flows involve an initial outlay followed by a series of positive cash inflows, typically seen in standard investment scenarios.