Assume That the Modified Duration of a Bond Is 2 $\times$

question 55

Multiple Choice

Assume that the modified duration of a bond is 2.45 years and that the potential adverse move in yield is 16.5 basis points. What is the bond's price volatility (round to two decimals) ?

• A) 2.45 \(\times\) 0.00165 = 0.40%.
• B) -2.45 \(\times\) 0.00165 = -0.40%.
• C) 2.45 \(\times\) 0.0165 = 4.04%.
• D) -2.45 \(\times\) 0.0165 = -4.04%.

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Definitions:

Informational Social Influence

The process of changing one's behavior based on the desire to be right or to understand the correct way to act in a given situation.

Group Polarization

A phenomenon where the attitude of a group as a whole can become stronger than the attitudes of its individual members.

Bystander Effect

The phenomenon where individuals are less likely to offer help to a victim when other people are present.

Milgram's Study

A series of social psychology experiments conducted by Stanley Milgram, which measured the willingness of study participants to obey an authority figure who instructed them to perform acts conflicting with their personal conscience.