Which of the Following Statements Is (Are)correct Regarding Duration

question 63

Multiple Choice

Which of the following statements is (are) correct regarding duration?

• A)In comparing two bonds with the same yield to maturity and the same maturity,a bond with a higher coupon rate will have a longer duration.
• B)In comparing two loans with the same maturity and the same interest rate,a fully amortized loan will have a shorter duration than a loan with a balloon payment.
• C)The duration will always be shorter than the maturity for all debt instruments.
• D)All of the options are correct.
• E)B and C

Comprehend the relationship between risk and expected returns on investments.

Recognize the effect of changes in interest rates on the security market line.

Understand the concept of breakeven analysis and its application in business decisions.

Calculate and interpret the utilization and efficiency of business operations.

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Definitions:

Scientific Method

A systematic and logical approach to discovering how things in the universe work, through observation, experimentation, and analysis.

Hypothesis Testing

A statistical method used to determine if there is enough evidence in a sample of data to infer that a certain condition is true for the entire population.

Content Analysis

A research technique used to objectively and systematically analyze the content of communication, such as texts, images, and media.

Cultural Changes

Transformations in the beliefs, norms, values, and practices of a society or community over time.