Which of the Following Statements Are Incorrect

question 43

Multiple Choice

Which of the following statements are incorrect?

• A) Investing in a zero-coupon asset with a maturity equal to the desired investment horizon is one method of immunising against changes in interest rates.
• B) Investing in a zero-coupon asset with a maturity equal to the desired investment horizon removes interest rate risk from the investment management process.
• C) Buying a fixed-rate asset whose duration is exactly equal to the desired investment horizon immunises against interest
• D) Using a fixed-rate bond to immunisea desired investment horizon means that the reinvested coupon payments are not affected by changes in market interest rates.

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Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services by identifying cost drivers.

Order Processing

The sequence of steps taken by a company to fulfill a customer order, from order receipt to delivery, including invoicing and shipment.

Idle Capacity

Unused or underused production capacity, where the facility is capable of producing more but is not due to lack of demand or other factors.

Activity-Based Costing

This costing method assigns overhead and indirect costs to specific activities, thus providing a more accurate reflection of the costs associated with producing specific products or services.