Which of the Following Is NOT True About Duration

question 6

Multiple Choice

Which of the following is NOT true about duration?

• A) It equals the years-to-maturity for a zero coupon bond
• B) It equals the weighted average of payment times for a bond, where weights are proportional to the present value of payments
• C) Equals the weighted average of individual bond durations for a portfolio, where weights are proportional to the present value of bond prices
• D) The prices of two bonds with the same duration change by the same percentage amount when interest rate move up by 100 basis points

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Definitions:

Direct Labor

The wages and benefits for employees directly involved in the production of goods or services.

Plantwide Factory Overhead Rate

A single overhead absorption rate used across an entire manufacturing plant, calculated by dividing the total factory overhead by a predetermined base, such as total direct labor hours or machine hours.

Overhead Costs

Expenses not directly associated with production, including rent, utilities, and office expenses, that support the overall business operations.

Allocated

The process of assigning or distributing resources or expenses to various accounts or departments based on a predetermined criteria.