Duration of a Pure Discount Bond

question 63

Multiple Choice

Duration of a pure discount bond:

• A) is equal to its half-life.
• B) is less than a zero coupon bond.
• C) is equal to the liabilities hedged.
• D) is equal to its maturity.
• E) None of these.

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Definitions:

Indirect Method

A method of reporting cash flows from operating activities by adjusting net income for changes in balance sheet accounts.

Accounts Receivable

Money owed to a company by its customers for goods or services already delivered but not yet paid for.

Inventory

The complete list of items, such as raw materials, work-in-progress, and finished goods, that a company holds, which are often considered as assets.

Financing Activities

Transactions involving long-term liabilities, equity, and changes in cash flows resulting from efforts to finance the company's operations.