The Mean of Any Normal Distribution Is Always Zero

question 141

True/False

The mean of any normal distribution is always zero.

Understand advanced strategies such as rate anticipation swaps, substitution swaps, and the use of convexity in portfolio management.

Understand the concept of bond duration and its calculation.

Calculate the change in bond prices given duration and a change in yield.

Distinguish between Macaulay duration and modified duration.

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Definitions:

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, the purchasing power of currency is falling.

Pure Rate

The interest rate exclusive of all other elements such as risk premium, inflation, or other costs often considered the real rate of interest with no adjustments.

Default Risk Premium

The additional yield that a borrower must offer to compensate lenders for the risk that the borrower may fail to make required payments.

Corporate Bond

A type of debt security issued by corporations to finance their operations, projects, or expansion plans.