Par-Value Bond XYZ Has a Modified Duration of 6

question 75

Multiple Choice

Par-value bond XYZ has a modified duration of 6. Which one of the following statements regarding the bond is true?

• A) If the market yield increases by 1%, the bond's price will decrease by $60.
• B) If the market yield increases by 1%, the bond's price will increase by $50.
• C) If the market yield increases by 1%, the bond's price will decrease by $50.
• D) If the market yield increases by 1%, the bond's price will increase by $60.