Duration Is Influenced by Everything Except

question 55

Multiple Choice

Duration is influenced by everything except:

• A)maturity.
• B)market rate of interest.
• C)coupon rate on the bond.
• D)the issuer of the bonD.The three factors that determine the value of duration are the maturity of the bond,the market rate of interest,and the coupon rate.Duration is positively correlated with maturity but moves in the opposite direction of market rates of interest and coupon rates;that is,the higher the market rate of interest or the coupon rate,the lower the duration.

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Definitions:

Narcissism

A psychological condition characterized by self-preoccupation, lack of empathy, and unconscious deficits in self-esteem.

Self-Serving Bias

A common tendency for individuals to attribute their successes to internal factors and their failures to external factors.

External Locus

The belief that one's outcomes in life are controlled by external forces or fate rather than one's own efforts.

Erroneously Thinking

The process of making mistakes in reasoning or understanding; incorrect or faulty thinking.