Which of the Following Duration Analysis Is Incorrect

question 89

Multiple Choice

Which of the following duration analysis is incorrect?

• A) Duration can be used to calculate the dollar value impact of an interest rate change on the value of a security.
• B) The duration of a portfolio is the weighted duration of each asset or liability in the portfolio.
• C) A longer term bond with a higher duration than a short-term bond is faced with higher interest rate risk.
• D) Duration analysis assumes that yield curves are normal or upward sloping.

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Definitions:

Cued Recall

A memory recall process where a person is given hints or cues to assist in retrieving information from memory.

Recognition

The cognitive process of identifying a previously encountered entity or information.

Explicit Memory

Explicit memory involves conscious recollection of specific facts and events that can be verbally described, also known as declarative memory.

Associations

Connections or relationships between thoughts, ideas, or concepts in the mind.