Par-Value-Bond GE Has a Modified Duration of 11

question 37

Multiple Choice

Par-value-bond GE has a modified duration of 11. 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 $55.
• B) If the market yield increases by 1%, the bond's price will increase by $55.
• C) If the market yield increases by 1%, the bond's price will decrease by $110.
• D) If the market yield increases by 1%, the bond's price will increase by $110.