Which of the Following Statements About Duration Is Correct? a Bond's

question 13

Multiple Choice

Which of the following statements about duration is correct? a bond's:

• A) effective duration is a measure of yield duration.
• B) modified duration is a measure of curve duration.
• C) modified duration cannot be larger than its Macaulay duration (assuming a positive yield-to-maturity).

---

Definitions:

Planned Investment

Expenditures that businesses intend to make in the future for new capital assets, such as buildings and machinery, to increase production capabilities.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by high unemployment, deflation, and a drop in global GDP.

Aggregate Demand

Total requisites for goods and services across an economic landscape, determined at a steady general price level over a fixed time frame.

Price Level

An index that measures the average of current prices across the entire spectrum of goods and services produced in the economy, reflecting the cost of living and inflation.