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:

Perfect Substitutes

Goods or services that can be used in exactly the same way and are interchangeable in consumption or use.

Income Effect

The variation in a person's or an economy's earnings and its effect on the amount of a product or service that is requested.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods.

Price

The anticipated sum of money, necessitated, or allocated in payment for something.