Graph 5-2

question 172

Multiple Choice

Graph 5-2
-In Graph 5-2, the elasticity of demand from point A to point B, using the midpoint method, would be:

• A)1
• B)1.5
• C)2
• D)2.5

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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.