单选题 Effective duration is more appropriate than modified duration as a measure of a bond's price sensitivity to yield changes when: A. the bond contains embedded options. B. yield curve changes are not parallel. C. the bond is a floating rate security.

【正确答案】 A

【答案解析】Effective duration takes into consideration embedded options in the bond. Modified duration does not consider the effect of embedded options. For option-free bonds, modified duration will be similar to effective duration. Both duration measures are based on the value impact of a parallel shift in a flat yield curve.