A Bond with Duration of 5

question 19

Multiple Choice

A bond with duration of 5.7 years has a yield to maturity of 9 percent. The bond's volatility (modified duration) is

• A)1.9 percent.
• B)5.2 percent.
• C)5.7 percent.
• D)9.0 percent.

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Definitions:

Holder

An individual or entity that legally possesses a negotiable instrument, like a check or bond, and has the right to enforce its terms.

Immunity

A provision or status that protects a person or entity from legal action or liability under certain conditions.

Drawee

The party directed by a drafter (e.g., the issuer of a check) to pay a certain sum of money to the party named in the document.