The Economic Interpretation of Duration Is

question 34

Multiple Choice

The economic interpretation of duration is

• A)the percentage of the current market price of a security that is accounted for by the book value of the security.
• B)the interest elasticity of a security to a small change in interest rates.
• C)the maturity elasticity of a security to a small change in cash flows of the security.
• D)the price elasticity of a security to a small change in interest rates.
• E)The average time it will take to equate the present value of future cash flows from the security to the cost of the security.

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Definitions:

Production Possibilities

Refers to the various combinations of goods and services an economy can produce, given its available resources and technology.

Capital Goods

Durable goods that are used in the production of other goods or services, such as machinery and equipment.

Consumer Goods

Products that are purchased for consumption by the average consumer, as opposed to goods used in the production of other products.

Production Alternative D

A hypothetical option in a decision-making process for producing goods or services, often characterized by differences in technology, labor, or resources.