Which of the Following Statements About Macaulay Duration Is Correct

question 23

Multiple Choice

Which of the following statements about Macaulay duration is correct?

• A) a bond's coupon rate and Macaulay duration are positively related.
• B) a bond's Macaulay duration is inversely related to its yield-to-maturity.
• C) The Macaulay duration of a zero-coupon bond is less than its time-to-maturity.

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Definitions:

Large Firms

Companies that are significantly larger than the average for their industry, often having considerable influence over market conditions and prices.

Demand Curve

A graphical representation that shows the inverse relationship between the price of a good or service and the quantity demanded by consumers.

Perfect Competitor

An entity in a highly competitive market where firms sell homogeneous products, have no control over market price, and where there is free entry and exit of firms.

Elastic Demand Curve

Represents a situation where the quantity demanded of a good or service significantly changes in response to a change in price.