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.

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Definitions:

Environment

The aggregate of surrounding things, conditions, or influences affecting the growth, development, or existence of individuals or organizations.

Ethnicity

A category of people who identify with each other based on shared attributes such as cultural heritage, language, history, or ancestry.

Medium Status

A position or level that is in the middle of a hierarchy or ranking system, neither high nor low.

Group Norms

The shared expectations and rules that guide behavior of people within social groups.