Q651
Direct relationship between price change and interest rate change is represented by
A.
positive duration
AnswerB.
positive discount
C.
negative discount
D.
negative duration
Answer: Option A
Solution
Answer: Option A
Solution:
Direct relationship between price change and interest rate change is represented by positive duration. The name for a particular relationship between changes in the price of a debt security and changes in prevailing interest rates. When a security has positive duration, its price increases in response to a decrease in prevailing market rates. Almost all securities have positive duration.