If a Financial Institution Has 50% of Its Portfolio in a Bond

question 58

Multiple Choice

If a financial institution has 50% of its portfolio in a bond with a five-year duration and 50% of its portfolio in a bond with a seven-year duration,what is the duration of the portfolio?

• A)12 years
• B)7 years
• C)6 years
• D)5 years

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Definitions:

Production Possibility Frontier

A schematic that reveals all potential highest productions for two different products, given a predefined set of resources and various factors.

Larger Oven

A reference to an increased capacity or size of an oven which can potentially enhance productivity or efficiency in cooking or baking.

Gain

An increase in wealth, resources, or value, often realized through investments, business operations, or other financial activities.

Loss

A situation in which expenses exceed revenues, leading to a negative financial outcome for a business or individual.