• For a brand new, 30 year 4% residential mortgage, using modified duration equals about 12 years, using a market interest rate of 4%. In practice, the fair market value of the mortgage will ___ if interest rates for residential mortgages suddenly fall to 3%

  • OPTIONS:

    • Fall but by much more than 12%

    • Rise, but by much more than 12%

    • Rise, but by much less than 12%