Which One of the Following Statements Is False Concerning the Duration

question 65

Multiple Choice

Which one of the following statements is false concerning the duration of a perpetuity

• A)The duration of 15% yield perpetuity that pays $100 annually is longer than that of a 15% yield perpetuity that pays $200 annually.
• B)The duration of a 15% yield perpetuity that pays $100 annually is shorter than that of a 15% yield perpetuity that pays $200 annually.
• C)The duration of a 15% yield perpetuity that pays $100 annually is equal to that of 15% yield perpetuity that pays $200 annually.
• D)The duration of 15% yield perpetuity that pays $100 annually is longer than that of a 15% yield perpetuity that pays $200 annually, and the duration of a 15% yield perpetuity that pays $100 annually is shorter than that of a 15% yield perpetuity that pays $200 annually
• E)All of the options

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Definitions:

Autonomous Consumption

The level of consumption that occurs when income is zero, representing the amount that needs to be consumed to sustain a basic standard of living.

Disposable Income

The financial pot allocated for households to manage their savings and expenditures after income tax deductions.

Autonomous Consumption

The level of consumption spending that occurs when income is zero, representing the expenditures that consumers must make even when they have no income.

Disposable Income

Households' budget for spending and savings after the necessary income taxes have been deducted.