The Duration of a 2 Year Annual 10% Bond That

question 56

Multiple Choice

The duration of a 2 year annual 10% bond that is selling for par is:

• A)1.00 years.
• B)1.91 years.
• C)2.00 years.
• D)2.09 years.
• E)None of the above.

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Definitions:

Social Preferences

Social Preferences indicate how individuals’ decision-making is influenced by the welfare of others, beyond self-interest.

Transitivity

In decision theory, the principle that if option A is preferred over B, and B is preferred over C, then A should be preferred over C.

Arrow's Impossibility Theorem

A theory indicating it is impossible to formulate a social preference ordering that satisfies all of a specific set of reasonable criteria when voters have three or more options.

Pairwise Majority Voting

A voting system in which each option is compared head-to-head with every other option, with the option winning the most direct comparisons being considered the overall winner.