The __________________________ Is Equal to the Duration of Each Individual

question 32

Short Answer

The __________________________ is equal to the duration of each individual type of liability in the portfolio weighted by the market value of each type of liability in the portfolio out of the total market value of all liabilities.

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Definitions:

Owner's Equity

The value that accrues to the owners of a company after settling all its debts, equivalent to the assets minus the liabilities.

Residual Equity

Residual Equity represents the amount of equity that remains for the common shareholders after all liabilities and preferential stock claims have been settled.

Assets

Assets are possessions of an individual or a business that hold value and can yield benefits in the future.

Liabilities

Financial obligations or debts that a company owes to outside parties, which must be paid back in the future.