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 duration indicates high sensitivity of an asset price to interest rate shocks. Duration measures the price sensitivity of a fixed-income security or portfolio to changes in interest rates. A higher duration implies a higher sensitivity to interest rate changes, meaning a larger price change in response to interest rate movements, making the security riskier.

Which of the Following Is Indicated by High Numerical Value