Canadian Securities Course (CSC) Practice Exam

Duration measures the sensitivity of a bond's price to changes in interest rates. This means that duration measures the potential impact of any changes in interest rates on the price of the bond. The other options are incorrect because A) Time until the bond matures does not necessarily indicate any changes in interest rates. B) Price volatility of the bond does not take into account interest rates. C) Yield of the bond is the percentage return an investor receives from holding a bond, not its sensitivity to changes in interest rates.