The Accounting Principle That Assumes That Inflation Will Not Take

question 92

Multiple Choice

The accounting principle that assumes that inflation will not take place or will be immaterial is:

• A)monetary unit.
• B)historical cost.
• C)realization.
• D)going concern.
• E)None of the answers are correct.

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Definitions:

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, adjusting for the bond's yield to maturity.

Modified Duration

A measure that estimates the price sensitivity of a bond or bond portfolio to interest rate changes, adjusting for the changing yield to maturity.

Convexity

A measure of the curvature or the rate of change of the bond's duration as interest rates change, affecting the bond's price sensitivity to interest rate changes.

Yield

The income generated by an investment, often expressed as a percentage of the investment's cost or market value.