Steel Pier Company has issued bonds that pay semiannually with the following characteristics:

If the maturity of the bond was less than 10 years, the modified duration would be ________ compared to the original modified duration.

A) larger
B) unchanged
C) smaller
D) The answer cannot be determined from the information given.

Modified Duration

A measure of the sensitivity of a bond's price to a change in interest rates, adjusting for the fact that the bond's cash flows change as yields change.

Maturity

The specific day when the core sum of a financial product, like a bond or loan, must be paid back to the investor.

Semiannually

Occurring twice a year; every six months.