Duration Measures

question 14

Multiple Choice

Duration measures

• A) weighted-average time until a bond's half-life.
• B) weighted-average time until cash flow payment.
• C) the time required to make excessive profit from the investment.
• D) weighted-average time until a bond's half-life and the time required to make excessive profit from the investment.
• E) weighted-average time until cash flow payment and the time required to make excessive profit from the

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Definitions:

Weighted Average Cost of Capital

A calculation of a firm’s cost of capital in which each category of capital is proportionately weighted, including equity, debt, and other forms of financing.

Market Risk Premium

The extra return investors demand for taking the risk of investing in stocks over a risk-free asset.

Common Stock

A form of shares in a corporation that grants the owner voting privileges and entitlement to a portion of the corporation's earnings via dividends.

Yield to Maturity

The total return anticipated on a bond if the bond is held until its maturity date, accounting for interest payments and capital gain or loss.