Multiple Choice
If investors rely strictly on modified duration to estimate the percentage change in the price of a bond, they will tend to ____ the price decline associated with an increase in rates and ____ the price increase associated with a decrease in rates.
A) underestimate; underestimate
B) overestimate; overestimate
C) underestimate; overestimate
D) overestimate; underestimate
Correct Answer:
Verified
Correct Answer:
Verified
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