Asked by Darcey Borellini on Jul 07, 2024
Verified
Duration is a concept that is useful in assessing a bond's ________.
A) credit risk
B) liquidity risk
C) price volatility
D) convexity risk
Price Volatility
The degree of variation in the price of a financial instrument, commodity, or market index over time, often measured by the standard deviation of returns.
- Acquire knowledge on the concept of bond convexity and its repercussion on price variations.
Verified Answer
OM
Olivia mualimJul 11, 2024
Final Answer :
C
Explanation :
Duration is a measure of the sensitivity of a bond's price to changes in interest rates. Therefore, it is useful in assessing a bond's price volatility. Duration does not directly provide information about credit risk, liquidity risk, or convexity risk.
Learning Objectives
- Acquire knowledge on the concept of bond convexity and its repercussion on price variations.