Bond a Has a Duration of 5

question 25

Multiple Choice

Bond A has a duration of 5.6 while bond B has a duration of 6.0.Bond B:

• A)would record a greater price variation,given a change in interest rates,relative to bond A.
• B)has a longer term to maturity than bond A.
• C)has a shorter term to maturity than bond A.
• D)would record a lower price variation,given a change in interest rates,relative to bond A.

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Definitions:

Predatory Pricing

A pricing strategy where a firm sets its prices below cost in the short term to drive competitors out of the market and achieve a monopoly.

Artificially Low Price

A pricing strategy where goods or services are sold at a price below their market value, often to drive competitors out of the market or gain market share.

Elastic

Describes a situation where the quantity demanded or supplied of a good or service significantly changes in response to price changes.

Cartel's Product

The goods or services produced and sold by a cartel, which is an association of independent businesses organized to regulate production, pricing, and marketing of goods.