10. Why does the duration measure become less reliable/precise for large interest rate fluctuations?

a. The linear approximation of a non-linear relationship such as the value of liabilities and interest rate delivers smaller errors when evaluating the effect of large changes of one variable onto the other

b. The non-monotonic relationship between the value of liabilities and interest rate makes the duration measure unreliable when interest rate fluctuations are large 5 Please turn over

c. A linear approximation always delivers larger errors when evaluating the effect of large changes of one variable onto the other

d. None of the above is a valid reason