Which One of the Following Is an Incorrect Statement Concerning

question 4

Multiple Choice

Which one of the following is an incorrect statement concerning duration

• A)The higher the yield to maturity, the greater the duration.
• B)The higher the coupon, the shorter the duration.
• C)The difference in duration is small between two bonds with different coupons each maturing in more than 15 years.
• D)The duration is the same as term to maturity only in the case of zero-coupon bonds.
• E)All of the statements are correct.

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Definitions:

Deferred Annuity

A financial security provided by insurers that holds back the distribution of income, either through regular installments or a one-time sum, until it's opted for by the investor.

Ordinary Annuity

A series of equal payments made at regular intervals, with the first payment occurring at the end of the period.

Deferred Annuity

An insurance contract in which periodic payments begin at some future date, typically used as a retirement savings vehicle.

Ordinary Annuity

An ordinary annuity is a series of equal payments made at the end of consecutive periods over a fixed length of time.