The Sensitivity of a Bond's Price to a Change in Interest

question 59

Multiple Choice

The sensitivity of a bond's price to a change in interest rates is known as:

• A) principal.
• B) yield.
• C) duration.
• D) coupon.

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Definitions:

Economic Profits

The surplus remaining after deducting all costs, including opportunity costs, from total revenues, indicating a firm's financial performance beyond breaking even.

Decreasing Returns to Scale

A situation in which, as the scale of production increases, the output increases at a diminishing rate, resulting in reduced efficiency.

Price-Inelastic

Describes a situation where the quantity demanded or supplied changes little when the price changes.

Prisoner's Dilemma

A scenario in game theory where two individuals acting in their own self-interest do not produce the optimal outcome.