Economics · Financial Management
According to the Theorems for Bond Value, which of the following statements correctly describes the relationship between the bond's term, its coupon rate, and its Bond Price Volatility?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The percentage price change for a decrease in yield is equal to the percentage price change for an equal increase in yield.
- 2Bond Price Volatility is directly related to the bond's Modified Duration.✓
- 3For a given change in yield, the percentage price change is greater for a high-coupon bond than for a low-coupon bond.
- 4Bond Price Volatility is inversely related to the time to maturity.
Correct answer
Bond Price Volatility is directly related to the bond's Modified Duration.
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