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Duration Is a Useful Number Because It Combines the Effects

question 40

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Duration is a useful number because it combines the effects of maturity, coupon, and market rates to indicate how the price of the bond will change with a change in interest rates.


Definitions:

Marginal Product

The additional output resulting from the use of one more unit of a variable input, holding all other inputs constant.

Production Possibilities

A curve that represents the maximum combination of goods or services that can be produced in a given period with available resources.

Marginal Product

The extra output generated from increasing a particular input by one unit, while all other inputs remain unchanged.

Customers Served

The number of consumers who purchase or are provided with a product or service by a business within a specific period.

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