Which of the Following Statements Is False

question 13

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.

---

Definitions:

Stackelberg

Refers to a model of strategic interaction in oligopolistic markets where one leader firm moves first and the other firms follow.

Cournot

A model of duopoly in which two firms assume the output of the other, deciding their own production levels to maximize profit.

Sequential Game

A type of game theory model where players make decisions one after another, with each player's decision possibly affecting future decisions by themselves or others.

Simultaneous-Move Scenario

A situation in game theory where all players make their decisions or choose their strategies at the same time without knowledge of the others' choices.