Dollar duration of a fixed-income security is defined as
A)the dollar value change in the price of a security to a one-percent change in the return on the security.
B)the dollar value change in the price of a security to a change in the Macaulay's duration of the security.
C)The market price of a security following a one-percent change in the return on the security.
D)Macaulay's duration divided by one plus the interest rate times the market price of the security.
E)the modified duration of a security times the price of the security.

Question

Quizplus · Accepted Answer

Dollar duration measures the sensitivity of the price of a fixed-income security to a change in its yield or interest rate. Specifically, it measures the dollar value change in the price of a security for a one-percent change in the security's yield. A higher dollar duration indicates a greater price sensitivity to interest rate changes. Therefore, choice A is the correct definition of dollar duration.

Dollar Duration of a Fixed-Income Security Is Defined as