Option Adjusted Duration Can Be Calculated as

question 90

Multiple Choice

Option adjusted duration can be calculated as

• A)Duration of noncallable bond - duration of call option on the bond.
• B)Duration of noncallable bond + duration of call option on the bond.
• C)Duration of callable bond - duration of call option on the bond.
• D)Duration of callable bond + duration of call option on the bond.
• E)None of the above.

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Definitions:

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and a product that is similar across suppliers, leading to price determination by supply and demand.

Production Function

A mathematical schema that links the inputs utilized in creating goods or services to the outputs produced.

Supply Function

A mathematical relationship that expresses the quantity of a good or service supplied in relation to its price.

Long-Run Total Cost Function

An equation representing the total cost of production when all factors of production are variable and optimized for scale.