Q654
Duration which is divided by interest rate plus one is classified as
A.
decreased duration
B.
increase duration
C.
modified duration
AnswerD.
at par duration
Answer: Option C
Solution
Answer: Option C
Solution:
Duration which is divided by interest rate plus one is classified as modified duration. Modified duration is a formula that expresses the measurable change in the value of a security in response to a change in interest rates. Modified duration follows the concept that interest rates and bond prices move in opposite directions.