If the bond market undergoes a large change in yield (for example, more than 100 basis points), then a bond's modified duration will
◦ understate both the price appreciation when rates fall and the price decline when rates increase.
◦ overstate both the price appreciation when rates fall and the price decline when rates increase.
◦ overstate the price appreciation when rates fall and understate the price decline when rates increase.
◦ understate the price appreciation when rates fall and overstate the price decline when rates increase.