If a Financial Institution Has 50 Percent of Its Portfolio

question 55

Multiple Choice

If a financial institution has 50 percent of its portfolio in a bond with a five-year duration and 50 percent 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:

Sample Proportion

The ratio of the number of times an event occurs to the total number of trials or times the activity is performed.

Control Chart

A graph used to study how a process changes over time, displaying data points in time order and often including control limits to detect anomalies.

Standard Error

The standard deviation of the sampling distribution of a statistic, most commonly of the mean.

Sample Standard Deviation

A measure of the amount of variation or dispersion of a set of sample values, indicating how much the values differ from the mean of the sample.