Which of the Following Statements Is FALSE

question 27

Multiple Choice

Which of the following statements is FALSE?

• A)As interest rates change,the market values of the securities and cash flows in the portfolio change as well,which in turn alters the weights used when computing the duration as the value-weighted average maturity.
• B)The duration of a portfolio of investments is the simple average of the durations of each investment in the portfolio.
• C)Adjusting a portfolio to make its duration neutral is sometimes referred to as immunizing the portfolio,a term that indicates it is being protected against interest rate changes.
• D)When the durations of a firm's assets and liabilities are significantly different,the firm has a duration mismatch.

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Definitions:

Visual Perspicacity

The ability to observe and understand visual information with sharpness and clarity.

Optic Chiasma

The X-shaped structure formed by the crossing over of the optic nerves in the brain, which allows visual information from each eye to be processed on both sides of the brain.

Blind Spot

Area in the retina where the axons of the three layers of retinal cells exit the eye to form the optic nerve; insensitive to light.

Fovea

A small depression in the retina of the eye where visual acuity is highest, due to the high concentration of cones and absence of rods.