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All Else Constant, Which of the Following Will Decrease the Macaulay

question 100

Multiple Choice

All else constant, which of the following will decrease the Macaulay duration of a straight bond?
I. reducing the coupon payment
II. shortening the time to maturity
III. lowering the yield to maturity


Definitions:

Average Rate of Return

A method of determining the profitability of an investment by dividing the average annual profit by the initial investment cost.

Total Income

The sum of all revenues and gains that a person or business receives over a period of time, before any expenses are subtracted.

Average Rate of Return

A metric that determines the earnings from an investment by dividing the mean yearly profit by the cost of the initial investment.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

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