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Answer: 694.
## Explanation Money duration (also called dollar duration) is calculated as: **Money Duration = Modified Duration × Full Price** Where: - **Full Price** = Flat Price + Accrued Interest - **Modified Duration** = 7.534 (annual) **Step 1: Calculate Full Price** Full Price = Flat Price + Accrued Interest Full Price = 92.084 + 1.458 = 93.542 **Step 2: Calculate Money Duration** Money Duration = Modified Duration × Full Price Money Duration = 7.534 × 93.542 **Step 3: Perform Calculation** 7.534 × 93.542 = 704.94 ≈ 705 **Step 4: Check Options** The calculation gives approximately 705, which matches option C. However, let's double-check: The question asks for money duration per 100 of par value, and we've used the correct formula. The answer should be **C. 705.** **Key Points:** - Money duration measures the price change in currency units for a given change in yield - It's calculated as modified duration multiplied by the full (dirty) price - Full price includes both flat price and accrued interest - This is a fundamental fixed income calculation for bond risk measurement
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An analyst gathers the following information about a bond:
| Annual modified duration | 7.534 |
|---|---|
| Flat price (per 100 of par value) | 92.084 |
| Accrued interest (per 100 of par value) | 1.458 |
The bond's money duration per 100 of par value is closest to:
A
B
C
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