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.
E)Smaller capital loss for a given change in interest rates.

Question

Quizplus · Accepted Answer

A high numerical value of the duration of an asset indicates that the asset price is highly sensitive to interest rate shocks. This means that a small change in interest rates will result in a large change in the price of the asset.

Which of the Following Is Indicated by High Numerical Value