Which one of the following must be equal for two bonds if they are to have similar changes in their prices given a relatively small change in bond yields?

Question

Quizplus · Accepted Answer

The duration of a bond measures its sensitivity to changes in interest rates. Therefore, two bonds with similar durations will have similar changes in price given a small change in bond yields. Coupon payment, time to maturity, market price, and current yield can all affect the price of a bond, but they are not necessarily indicative of how sensitive a bond will be to changes in interest rates.

Which One of the Following Must Be Equal for Two