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jainsh

Which of the following statements best describes empirical duration? A.A common way to calculate a bond’s empirical duration is to run a regression of its price returns on changes in a benchmark interest rate. B.A bond’s empirical duration tends to be larger than its effective duration. C.The price sensitivity of high-yield bonds to interest rate changes is typically higher than that of investment-grade bonds.

why are option B and C incorrect?

Hardik Kothari

What is Empirical Duration and how it differ from duration which we have studied in class?