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Answer: 561.51
**Explanation:** The money duration of a bond is calculated as the product of the annual modified duration and the full price of the bond (clean price plus accrued interest). - **Option A** is incorrect because it multiplies the modified duration with the clean price instead of the full price: `4.8250 * 114.75 = 553.67`. - **Option B** is correct because it uses the full price: `Full price = 114.75 + 1.625 = 116.375; Money duration = 116.375 * 4.8250 = 561.51`. - **Option C** is incorrect because it multiplies the full price with the Macaulay duration instead of the modified duration: `4.9469 * 116.375 = 575.70`. Money duration measures the change in the bond's price in currency units for a given change in yield-to-maturity. It is also known as 'dollar duration' in the United States.
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An analyst gathers the following information about a bond: Clean price (per 100 of par value) 114.75, Annual modified duration 4.8250, Macaulay duration (years) 4.9469, Accrued interest (per 100 of par value) 1.6250. The bond's money duration (per 100 of par value) is closest to:
A
553.67
B
561.51
C
575.70
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