Which of the following is indicated by high numerical value of the duration of an asset?
A) Low sensitivity of an asset price to interest rate shocks.
B) High interest inelasticity of a bond.
C) High sensitivity of an asset price to interest rate shocks.
D) Lack of sensitivity of an asset price to interest rate shocks.

Question

Quizplus · Accepted Answer

A high numerical value of the duration of an asset indicates high sensitivity of the asset price to interest rate shocks. Duration is a measure of the sensitivity of the asset price to changes in interest rates. The higher the duration, the more sensitive the asset price is to interest rate changes.

Which of the Following Is Indicated by High Numerical Value