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Duration is the elasticity, or sensitivity, of the bond's price to small interest rate (either required rate of return or yield to maturity) changes

What is elasticity?

Elasticity in economics is defined as the percentage change in one economic variable in reaction to a percentage change in another. If the price elasticity of demand for a good is -2, a 10% rise in price causes the quantity desired to fall by 20%.

Consumer durables are an example of a product with elastic demand. These are products that are purchased infrequently, such as a washing machine or a car, and can be delayed if the price rises. Automotive refunds, for example, have been quite successful in increasing automobile sales by lowering prices.

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