“Modified Duration is not an accurate predictor of bond price change” What do you think about...

Question

Question

“Modified Duration is not an accurate predictor of bond price change” What do you think about this statement? explain why u may agree or disagree?

business finance

Answer 1

Answer #1

"Modified Duration is not an accurate predictor of bond price change" because bond price are selected on the basis of different factors.

Example:

a) Inflation rate.

b) Time Value of Money.

c) Current Interest rate in the market.

We can't modified the duration of bond because that time price of bond is selected on the basis upper factors.

So I am disagree with this statement.

Answer 2

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