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    Question

    The approximate percentage change in a bond’s price

    for a 1% change in yield to maturity is given by:
    A Macaulay Duration Correct Answer Incorrect Answer
    B Modified Duration Correct Answer Incorrect Answer
    C Convexity Correct Answer Incorrect Answer
    D Approximate Duration Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Modified Duration provides the approximate percentage change in a bond’s price for a 1% change in yield to maturity. The Macaulay duration of a bond is a weighted number of periods until the cash flows are to received.

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