Which of the Following Is True

question 13

Multiple Choice

Which of the following is true?

• A)Holding other things constant, the duration of a bond decreases with time to maturity.
• B)Given time to maturity, the duration of a zero-coupon increases with yield to maturity.
• C)Given time to maturity and yield to maturity, the duration of a bond is higher when the coupon rate is lower.
• D)Duration is a better measure of price sensitivity to interest rate changes than is time to maturity.
• E)Given time to maturity and yield to maturity, the duration of a bond is higher when the coupon rate is lower and duration is a better measure of price sensitivity to interest rate changes than is time to maturity

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Definitions:

Tax Deductible

Costs that can be deducted from total income to lower the taxable income amount.

Return to Equity

The amount of net income returned as a percentage of shareholders equity.

Operating Income

Income generated from regular business operations, excluding expenses such as taxes and interest payments.

Selected Accounts

Specific financial accounts chosen for review or analysis due to their relevance or importance in a particular context.