The inverse relationship between price change and interest rate change is represented by ___________?
Correct answer: B. negative duration
- A. negative discount
- B. negative duration
- C. positive duration
- D. positive discountTry Prep Courses
Explanation
Bond prices generally move inversely to interest rates, and this inverse sensitivity is expressed in the price-change formula as a negative duration effect. Duration itself is usually reported as a positive measure, so the wording uses the sign of the relationship rather than the conventional duration definition.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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