Fixed Income Q98

98Analyst 1: In general, the modified duration and effective duration of a traditional option-free bond are identical.
Analyst 2: In general, the modified duration and effective duration of a traditional option free bond are not identical.
Which analyst’s statement is most likely correct?

Option : B
Explanation : The modified duration and effective duration of an option free bond are identical only in the rare circumstance of an absolutely flat yield curve.

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