All Else Equal, as Compared to an Annual Payment Fixed

question 102

Multiple Choice

All else equal, as compared to an annual payment fixed income security, a semi-annual payment security has a

• A)lower duration value and lower market value.
• B)higher duration but lower price sensitivity.
• C)lower duration and more cash flows.
• D)higher duration and more cash flows.
• E)none of the options.

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Definitions:

Prices

The amount of money required to purchase a good, service, or asset, often influenced by supply and demand.

Short-run

A period in which at least one factor of production is fixed, limiting the ability of a business to fully adjust to market changes.

Short-run Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period at current prices.

Short-run Phillips Curve

It illustrates the inverse relationship between the rate of inflation and the unemployment rate in the short term.