All Else Constant, Which of the Following Will Decrease the Macaulay

question 100

Multiple Choice

All else constant, which of the following will decrease the Macaulay duration of a straight bond?
I. reducing the coupon payment
II. shortening the time to maturity
III. lowering the yield to maturity

• A)I only
• B)II only
• C)II and III only
• D)I and II only
• E)I and III only

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Definitions:

China

A country in East Asia, the world's most populous nation, known for its significant influence in terms of culture, economy, and politics.

Managed Float

A currency exchange rate policy that allows a country's currency value to fluctuate in response to the foreign exchange market, but with central bank interventions to stabilize it when necessary.

Exchange Rate System

The mechanism by which a country manages its currency in relation to other currencies, involving policies on currency valuation, exchange regimes, and market conditions.

Central Banks

Institutions that manage a country's currency, money supply, and interest rates. They oversee the commercial banking system of their respective countries.