Which of the Following Statements Are Incorrect

question 15

Multiple Choice

Which of the following statements are incorrect?

• A) Convexity is a desirable effect to a portfolio manager because it is easy to measure and price.
• B) All fixed-income assets exhibit convexity in their price-yield relationships.
• C) The greater is convexity, the more insurance a portfolio manager has against interest rate increases and the greater potential gain from rate decreases.
• D) The fact that the capital gain effect for rate decreases is greater than the capital loss effect for rate increases is caused by convexity in the yield-price relationship.

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Definitions:

Additional Shifts

Extra work periods added to a company's regular schedule to increase production or cover demand.

Financial Plan

A comprehensive evaluation of an individual's or organization's current pay and future financial state by using current known variables to predict future income, asset values, and withdrawal plans.

Forecast of Sales

An estimate of the future sales volume over a specific period, based on historical data, market analysis, and other factors.

Revenue

The income generated from normal business operations and includes discounts and deductions for returned merchandise.