Duration Times the Reinvestment Rate Will Give the Approximate Change

question 30

True/False

Duration times the reinvestment rate will give the approximate change in bond price for a 1 percent change in interest rates.

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Definitions:

Capital Structure

Refers to the way a company finances its assets through a combination of debt, equity, and other securities.

Debt

An amount of money borrowed by one party from another, often used by businesses and governments to finance operations and projects.

Equity

The worth of a stake in property ownership, such as the equity held by shareholders in a company.

Dealer Market

A financial market where dealers buy and sell securities for their own accounts, acting as principals in the transaction.