Price volatility of a bond can be estimated by multiplying the bond's modified duration by the adverse daily yield move.

Name: Price volatility of a bond can be estimated by multiplying the bond's modified duration by the adverse daily yield move.
Brand: Quizplus
Rating: 4.8 (48 reviews)

Question

Quizplus · Accepted Answer

This statement is true. Modified duration measures a bond's sensitivity to changes in interest rates, and by multiplying it with the adverse daily yield move, we can estimate the potential price volatility of the bond in response to interest rate changes.

Price Volatility of a Bond Can Be Estimated by Multiplying