If There Are M Levels of Qualitative Variables, ________ Dummy

question 8

Short Answer

If there are m levels of qualitative variables, ________ dummy variables are used to specify them
a) m
b) m+1
c) m-1
d) m x 2

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Definitions:

Duration

A measure of the sensitivity of the price of a financial asset or liability to changes in interest rates, often used with bonds to assess interest rate risk.

Coupon Bond

A coupon bond is a debt security that pays the holder periodic interest payments based on a fixed interest rate until the bond matures, at which point the face value is paid to the bondholder.

Substitution Swap

Exchange of one bond for another more attractively priced bond with similar attributes.

Duration

An indicator that represents how the price of a bond or any similar type of debt is affected by interest rate fluctuations, displayed as a duration in years.