The Modified Duration of a Bond Portfolio Worth $1 Million

question 20

Multiple Choice

The modified duration of a bond portfolio worth $1 million is 5 years.By approximately how much does the value of the portfolio change if all yields increase by 5 basis points?

• A) Increase of $2,500
• B) Decrease of $2,500
• C) Increase of $25,000
• D) Decrease of $25,000

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Definitions:

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Written works that utilize theoretical concepts and complex language to discuss ideas not easily accessible through direct observation.

Edward Said

A Palestinian-American literary theorist and critic, best known for his work on orientalism and post-colonial theory.

Discourse Analysis

A methodological approach that studies how language is used in texts and context to construct meaning and social reality.

Orient

To align or position something relative to points of a compass or other specified positions; in a broader sense, to determine one's position or context in relation to something.