SIE practice questionmediumDuration
What does duration measure in relation to a bond?
- ANumber of coupon payments per year
- BExpected default rate
- CInvestor holding period
- DPrice sensitivity to interest rate changes✓ Correct answer
Explanation
Why D — Price sensitivity to interest rate changes
Duration measures how much a bond's price will change as interest rates move. It’s not the default rate, holding period, or payment frequency.
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