Using the information below, which bond has the greatest money duration per 100 of par value assuming annual coupon payments and no accrued interest? $\begin{array} { l r c c c c }
\hline \text { Bond } & \begin{array} { c }
\text { Time-to- } \
\text { Maturity }
\end{array} & \begin{array} { c }
\text { Price Per } 100 \
\text { of Par Value }
\end{array} & \text { Coupon Rate } & \begin{array} { c }
\text { Yield-to- } \
\text { Maturity }
\end{array} & \begin{array} { c }
\text { Modified } \
\text { Duration }
\end{array} \
\hline \text { A } & 6 \text { years } & 85.00 & 2.00 \% & 4.95 \% & 5.42 \
\text { B } & 10 \text { years } & 80.00 & 2.40 \% & 4.99 \% & 8.44 \
\text { C } & 9 \text { years } & 85.78 & 3.00 \% & 5.00 \% & 7.54 \
\hline
\end{array}$
A) bond a
B) bond b
C) bond C

Question

Using the information below, which bond has the greatest money duration per 100 of par value assuming annual coupon payments and no accrued interest? $\begin{array} { l r c c c c } 
\hline \text { Bond } & \begin{array} { c } 
\text { Time-to- } \
\text { Maturity }
\end{array} & \begin{array} { c } 
\text { Price Per } 100 \
\text { of Par Value }
\end{array} & \text { Coupon Rate } & \begin{array} { c } 
\text { Yield-to- } \
\text { Maturity }
\end{array} & \begin{array} { c } 
\text { Modified } \
\text { Duration }
\end{array} \
\hline \text { A } & 6 \text { years } & 85.00 & 2.00 \% & 4.95 \% & 5.42 \
\text { B } & 10 \text { years } & 80.00 & 2.40 \% & 4.99 \% & 8.44 \
\text { C } & 9 \text { years } & 85.78 & 3.00 \% & 5.00 \% & 7.54 \
\hline
\end{array}$
A) bond a
B) bond b
C) bond C

Quizplus · Accepted Answer

Bond B has the greatest modified duration of 8.44, which indicates it has the greatest sensitivity to interest rate changes and thus the greatest money duration per 100 of par value.

Using the Information Below, Which Bond Has the Greatest Money