If a Financial Institution Has 50% of Its Portfolio in a Bond

question 58

Multiple Choice

If a financial institution has 50% of its portfolio in a bond with a five-year duration and 50% of its portfolio in a bond with a seven-year duration,what is the duration of the portfolio?

• A)12 years
• B)7 years
• C)6 years
• D)5 years

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Definitions:

Customizing Department

A specialized department within an organization that tailors products or services to meet specific customer requirements.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate overhead costs to products based on a certain basis such as labor hours or machine hours.

Job-Order Costing

A costing system used to accumulate costs of manufacturing a job or batch, where each job or batch has its distinct characteristics.

Predetermined Overhead Rate

This rate is calculated before a period begins and is used to apply overhead costs to products based on a selected activity base.