Which of the Following Statements Is FALSE

question 27

Multiple Choice

Which of the following statements is FALSE?

• A)As interest rates change,the market values of the securities and cash flows in the portfolio change as well,which in turn alters the weights used when computing the duration as the value-weighted average maturity.
• B)The duration of a portfolio of investments is the simple average of the durations of each investment in the portfolio.
• C)Adjusting a portfolio to make its duration neutral is sometimes referred to as immunizing the portfolio,a term that indicates it is being protected against interest rate changes.
• D)When the durations of a firm's assets and liabilities are significantly different,the firm has a duration mismatch.

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Definitions:

Psychosocial Stress

Stress caused by interpersonal relationships and interactions with one's social environment, potentially affecting mental and physical health significantly.

Critically Ill

A condition where a person is suffering from a life-threatening illness or injury, requiring intensive medical care.

Distraught

Deeply upset and agitated, often as a result of distress or worry.

Respiratory Illness

A broad category of diseases that affect the lungs and airways, such as asthma, bronchitis, or pneumonia.