Salma Conducts a Study and Finds That Her Data Do

question 47

Multiple Choice

Salma conducts a study and finds that her data do not completely support her theory. Which of the following statements should she avoid saying?

• A)"My data are inconsistent with my theory."
• B)"My data disprove my theory."
• C)"My theory needs amending."
• D)"I may need to collect more data."

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or a fixed income portfolio to changes in interest rates.

Interest-Rate Risk

The possibility of incurring losses in investments as a result of variations in interest rates, especially impacting fixed-income securities.

Coupon

The interest rate paid by a bond, usually expressed as a percentage of the bond's face value.

Cash Flow Matching

A form of immunization, matching cash flows from a bond portfolio with those of an obligation.