Direct relationship between price change and interest rate change is represented by

A. positive duration

B. positive discount

C. negative discount

D. negative duration

Answer: Option A

Solution(By Examveda Team)

Direct relationship between price change and interest rate change is represented by positive duration. The name for a particular relationship between changes in the price of a debt security and changes in prevailing interest rates. When a security has positive duration, its price increases in response to a decrease in prevailing market rates. Almost all securities have positive duration.