For small change in interest rates, market prices of bonds move in an inversely proportional manner according to the size of the
A)equity.
B)asset value.
C)liability value.
D)duration value.
E)Answers A and B only.

Question

Quizplus · Accepted Answer

The market prices of bonds move in an inversely proportional manner to the size of the duration value, which is a measure of the bond's sensitivity to changes in interest rates. This means that as interest rates rise, bond prices will fall, and as interest rates fall, bond prices will rise. Therefore, the correct answer is D.

For Small Change in Interest Rates, Market Prices of Bonds