5 What is NOT a limitation of using duration as a measure of

5. What is NOT a limitation of using duration as a measure of a bond’s price sensitivity to interest-rate changes?
a. Duration measures are only approximations for small changes in yield.
b. Duration measures assume that in discounting the cash flows, all interest rate shifts are parallel.
c. Both A & B
d. All of the above
e. None of the above

e

Solution

a. Duration measures are only approximations for small changes in yield.
b. Duration measures assume that in discounting the cash flows, all interest rate shifts are parallel.
c. Both A & B