Which of the Following Is Indicated by High Numerical Value

question 7

Multiple Choice

Which of the following is indicated by high numerical value of the duration of an asset?

• A) Low sensitivity of an asset price to interest rate shocks.
• B) High interest inelasticity of a bond.
• C) High sensitivity of an asset price to interest rate shocks.
• D) Lack of sensitivity of an asset price to interest rate shocks.

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Definitions:

Discounting

The process of determining the present value of a payment or a stream of payments that is to be received in the future.

Note Payable

A financial obligation or loan documented by a written promissory note specifying repayment terms.

Interest-Bearing Note

A debt instrument or loan that accrues interest over time, which the borrower is required to pay.

Note Payable

A written promise to pay a specific sum of money to a creditor at a future date, often including interest payments.