n NISM Certifications
XXI NISM Series XXI-A
Medium

Which of the following statements is correct regarding the concept of "Duration" in bond investing?

Practice question from NISM XXI A for PMS - Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Duration measures the sensitivity of a bond's price to interest rate changes

    Correct answer

  2. B

    Duration is the time until the bond matures

  3. C

    Duration is the same as the coupon rate of the bond

  4. D

    Duration indicates the risk of default on the bond

Why this is the answer

Duration quantifies interest rate risk.

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