While Investment Managers Can Alter the Interest Rate Sensitivity of Their

question 28

Multiple Choice

While investment managers can alter the interest rate sensitivity of their portfolios with cash market instruments, a quick and inexpensive means for doing so (on either a temporary or permanent basis) is to use ________.

• A) bond indentures.
• B) stock index contracts.
• C) interest rate treaties.
• D) futures contracts.

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Definitions:

Price Floor

A legal minimum on the price at which a good can be sold.

Consumer Surplus

The variation in the comprehensive amount consumers are willing to layout for a good or service and the actual layout.

Total Surplus

The sum of consumer and producer surplus, representing the overall benefit to society from the production and consumption of goods and services.

Equilibrium Price

The market price at which the supply of an item equals the quantity demanded, leading to an economic state of balance.