Suppose that you use duration to approximate the changes in bond price. When interest rate goes up, the absolute value of duration approximation is than the absolute value of actual bond price changes. When interest rate goes down, the absolute value of duration approximation is than the absolute value of actual bond price changes. A. smaller, larger B. smaller, smaller C. larger, larger D. larger, smaller

Smaller , Larger A

Explanation:

When interest rates are changed , the  shorter the duration , the less the volatility and the higher the duration , the more the volatility. This explains the reason that duration decrease at a higher rate when interest increases and vice versa.

A slight increases in the interest rate triggers a higher fall in the duration and an slight decrease in the interest rate triggers a higher rise in the duration

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two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.