Duration, as Referred to in This Chapter, Is Defined As

question 22

Multiple Choice

Duration, as referred to in this chapter, is defined as:

• A) A measure of the extent to which different investments expose an investor to interest rate risk
• B) A measure of the weighted-average time required before all principal and interest is received on an investment
• C) A measure that takes into account both the size of cash flows and the timing of their receipt
• D) All of the above

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Definitions:

Complements

Goods or services that are used together, where the use of one increases the demand for the other.

Substitutes

Goods or services that can be used in place of each other; as the price of one increases, the demand for the other increases.

Price Inelastic

Describes a situation where the demand for a product does not significantly change with a change in its price.

Gasoline Demand

The total quantity of gasoline that consumers are willing and able to purchase at various prices, within a given time period.