Duration Is a Useful Number Because It Combines the Effects

question 40

True/False

Duration is a useful number because it combines the effects of maturity, coupon, and market rates to indicate how the price of the bond will change with a change in interest rates.

---

Definitions:

Herfindahl Index

A measure of the concentration of industries or markets, calculated as the sum of the squares of the market shares of the largest firms, used to assess the extent of competition.

Concentration Ratios

measures that indicate the extent to which a small number of firms dominate the sales, output, or capacity in a particular market.

Game Theory

A theoretical framework for conceiving social situations among competing players and predicting their optimal decisions.

Pricing Behavior

Strategies and factors that firms consider when setting prices for their products or services.