问题
单项选择题
Why should effective duration, rather than modified duration, be used when bonds contain embedded options（）
A. Effective duration considers expected changes in cash flows.
B. Modified duration considers expected changes in cash flows.
C. Either could be used if the bond has embedded options.
答案
参考答案：A
解析：
Modified duration assumes that the cash flows on the bond will not change (i. e. , that we are dealing with non-callable bonds). This greatly differs from effective duration, which considers expected changes in cash flows that may occur for bonds with embedded options.