Which of the Following Is a Characteristic of a Bullet

question 50

Multiple Choice

Which of the following is a characteristic of a bullet portfolio?

• A) Holding zero- coupon bonds with terms and duration equal to the duration of the benchmark.
• B) If the interest rates change, the gains and losses on the portfolio will approximately match those of the benchmark.
• C) It consists of two zero- coupon bonds with average duration equal to the duration of the benchmark.
• D) A and B.

Understand the principles of calculating the mean and standard deviation for combined independent random variables.

Calculate the standard deviation of a binomial scenario.

Apply the concept of standard deviation to insurance and business profit models.

Utilize formulas for the mean and standard deviation to solve practical problems involving multiple independent variables.

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Definitions:

Descending Plate

In plate tectonics, a slab of the Earth's lithosphere that is moving downward into the mantle at a convergent boundary.

Decreasing Pressure

A reduction in the force exerted by a fluid (gas or liquid) on a surface.

Partial Melting

the process where only a portion of a solid is melted, which often occurs in the Earth's mantle.

Melting Temperatures

The temperatures at which solid materials become liquids.