The Modified Duration

question 83

Multiple Choice

The modified duration:

• A) is equal to the Macaulay duration divided by (1 + Yield to maturity).
• B) multiplied by (-1 × Change in the yield to maturity) equals the approximate percentage change in a bond's price.
• C) will be the same for any bonds that have equal times to maturity.
• D) only applies to pure discount securities.
• E) must be converted to a Macaulay duration before computing the percentage change in a bond's price.

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Definitions:

Driving Forces

Factors or energies that lead to changes in a physical system or environment, often initiating or influencing processes.

Resisting Forces

Forces that oppose motion or movement, including friction, air resistance, and tension, which work against the direction of motion.

Plate Tectonics

A theory in which the lithosphere is divided into a number of mostly rigid plates that move relative to one another, causing tectonic activity along these boundaries.

Tectonic Plate

A massive, irregularly shaped slab of solid rock, part of the Earth's lithosphere, which moves and interacts with other plates in a process that shapes the Earth's surface.