The Longer the Time That Has Elapsed Since the Price

question 78

Multiple Choice

The longer the time that has elapsed since the price of a good changed,the

• A) more elastic the demand for that good.
• B) steeper the demand curve.
• C) less elastic the demand for that good.
• D) smaller the amount of that good bought.
• E) fewer substitutes available for the good.

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Definitions:

Bond's Duration

Bond's duration measures the sensitivity of the bond's price to changes in interest rates, often indicating the average time it takes for a bond to repay its true cost.

Price Volatility

The rate at which the price of a security increases or decreases for a given set of returns, representing the risk of price change.

Bond Swap

The process of selling one bond and purchasing another bond with different characteristics, often for tax optimization or to improve returns.

Active Portfolio Management

A strategy where portfolio managers make regular buy and sell decisions to try to outperform the market or a specific benchmark.