Bond A has a duration of 5.6 while bond B has a duration of 6.0.Bond B:
A)would record a greater price variation,given a change in interest rates,relative to bond A.
B)has a longer term to maturity than bond A.
C)has a shorter term to maturity than bond A.
D)would record a lower price variation,given a change in interest rates,relative to bond A.

Question

Quizplus · Accepted Answer

Duration measures a bond's sensitivity to interest rate changes. A higher duration indicates greater price volatility. Therefore, Bond B, with a duration of 6.0, would experience greater price variation than Bond A, with a duration of 5.6, given a change in interest rates.

Bond a Has a Duration of 5