Sensitivity of a bond price to a change in yield at a specific maturity is least appropriately estimated by using effective duration.
What is bond price?
- Daily monitoring of bond prices is valuable for determining the trajectory of interest rates and, more broadly, the future of the economy.
- Not surprisingly, they play a significant role in a properly managed and diversified investment portfolio.
- bond price and prices are always subject to price fluctuations, particularly during times of rising or falling interest rates. Let's talk about the connection between bond price and yield.
- The discount rate that connects a bond's cash flows to its current dollar price is called the yield.
- The periodic payment made to a bond's holder is known as the coupon rate.
- Despite the fact that the coupon rate on a bond is set, the price of a bond traded on secondary markets may change.
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