The Degree of Relatedness Between a Niece and an Uncle

question 54

Multiple Choice

The degree of relatedness between a niece and an uncle is ____, and the degree of relatedness between first cousins is ____.

• A) 0.75; 0.50
• B) 0.50; 0.25
• C) 0.25; 0.125
• D) 0.125; 0.0625
• E) 0.0625; 0.03125

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Definitions:

Duration

A financial metric that calculates the weighted average time until a bond or a portfolio of bonds pays out its cash flows, used to assess interest rate risk.

Effective Maturity

The average time until a bond is repaid, considering possible calls or prepayments, which might alter the time frame for return on investment.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, often used in financial analyses to find an average value wherein each data point can carry a different weight.

Convexity

A measure of the curvature in the relationship between bond prices and yield, indicating how the duration of a bond changes as interest rates change.