An appropriate composite risk measure that indicates the relative price volatility for a bond compared to interest rate changes is the bond's yield to maturity.

Question

Quizplus · Accepted Answer

Yield to maturity is a measure of the total return anticipated on a bond if the bond is held until it matures. It does not directly indicate a bond's price volatility in response to changes in interest rates. Instead, duration is a commonly used measure for this purpose.

An Appropriate Composite Risk Measure That Indicates the Relative Price