Duration Represents the Weighted Average Life of a Bond Where

question 46

Multiple Choice

Duration represents the weighted average life of a bond where the weights are based on the:

• A)future value of the individual cash flows relative to the present value of the total cash flows.
• B)present value of the individual cash flows relative to the future value of the individual cash flows.
• C)present value of the individual cash flows relative to the present value of the total individual cash flows.
• D)future value of the individual cash flows relative to the future value of the individual cash flows.

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Definitions:

Gross Income

The total income earned by an individual or a business before any deductions or taxes are taken out.

Political Subdivision

An administrative division of a country that is granted certain powers and responsibilities by legislation, such as a city, county, or district.

Constructive Receipt

A tax principle that taxes income individuals have earned but not yet received, based on the availability without substantial restriction.

Control

Refers to the power to influence or direct people's behavior or the course of events.