The Shortcomings of This Strategy Are the Following Except

question 35

Multiple Choice

The shortcomings of this strategy are the following except

• A)duration changes as the time to maturity changes,making it difficult to maintain a continuous hedge.
• B)estimation of duration is difficult for some accounts such as demand deposits and passbook savings account.
• C)it ignores convexity which can be distorting for large changes in interest rates.
• D)it is difficult to compute market values for many assets and liabilities.
• E)it does not assume a flat term structure,so its estimation is imprecise.

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Definitions:

Functionalism

A psychological philosophy that considers mental life and behavior in terms of active adaptation to the person's environment.

Mechanical Repetition

The act of repeating an action or a set of words mindlessly or without understanding, often for learning or practice.

Objective Sensations

Perceptions that correspond to external stimuli and are not influenced by personal feelings or interpretations.

Positive Reinforcement

A process in behavioral psychology where the introduction of a positive stimulus following a desired behavior increases the likelihood of that behavior being repeated.