💼 Pre-MBA Exam Prep

Duration in bond analysis measures:

A Time to maturity only
B A bond price sensitivity to changes in interest rates, expressed in years
C Coupon payment frequency
D Credit risk

✓ Correct Answer: Option B

Modified duration: approximate % change in bond price for a 1% change in yield. Higher duration = greater price sensitivity. Zero-coupon bonds have duration = maturity. Coupon bonds have duration < maturity.

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