Given Its Time to Maturity, the Duration of a Zero-Coupon

question 16

Multiple Choice

Given its time to maturity, the duration of a zero-coupon bond is ________.

• A) higher when the discount rate is higher
• B) higher when the discount rate is lower
• C) lowest when the discount rate is equal to the risk-free rate
• D) the same regardless of the discount rate

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Definitions:

Proximate Cause

The extent to which, as a matter of policy, a defendant may be held liable for the consequences of his or her actions. In the majority of states, proximate cause requires the plaintiff and the plaintiff’s damages to have been foreseeable at the time of the accident. In the minority of states, proximate cause exists if the defendant’s actions led to the plaintiff’s harm.

Policy Liability

Refers to the obligations a company or individual has under the terms of an insurance policy.

Compensatory Damages

A monetary award in a lawsuit intended to compensate the injured party for the loss or injury they have suffered.

Plaintiff Reimbursement

The process through which a plaintiff may be compensated for costs or losses incurred, often as part of the judgment in a legal case.