Which of the Following Is NOT a True Statement

question 25

Multiple Choice

Which of the following is NOT a true statement?

• A)Duration measures the time until the principal is repaid.
• B)Duration is the weighted average of the timing of the bond's payments.
• C)The weights in the calculation of duration are the present value of each payment,divided by the value of the bond.
• D)Modified duration measures the sensitivity of the bond's price to interest rate changes.

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Definitions:

Acid-Test Ratio

A financial metric used to determine a company's short-term liquidity position, measuring its ability to cover short-term liabilities with its most liquid assets.

Prepaid Expenses

Expenses paid in advance for goods or services to be received in the future, often recorded as assets on the balance sheet.

Current Liabilities

Short-term financial obligations that are due to be paid within one year or within the normal operating cycle of a business.

Acid-Test Ratio

A liquidity ratio, also known as the quick ratio, that measures a company's ability to pay off its current liabilities with its quick assets (cash, marketable securities, and accounts receivable).