When Interest Rates Decline, the Duration of a 10-Year Bond

question 9

Multiple Choice

When interest rates decline, the duration of a 10-year bond selling at a premium

• A) increases.
• B) decreases.
• C) remains the same.
• D) increases at first, then declines.
• E) decreases at first, then increases.

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Definitions:

Net Income

The net earnings of a business once all costs, taxes, and interest payments are subtracted from its overall income.

Investing Activities

Financial transactions involving the purchase and sale of long-term assets and other investments, reflected in a company's cash flow statement.

Six-Month Note

A short-term financial instrument that matures or is due for payment within six months from the date it was issued.

Operating Activities

Activities directly related to the operation of the business, including production, sales, and delivery of the company's product.