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:

Palpebrae

Another term for eyelids, which protect and moisten the eyes by spreading tear fluid and limiting the amount of light entering the eye.

Eyelids

Flexible covers that can close to protect the eye from injury and help keep the eye moist by spreading tears over its surface.

Anterior Sclera

The front part of the sclera, the white outer layer of the eyeball, providing structure and protection.

Otoliths

Otoliths are small, calcified particles in the inner ear that play a crucial role in sensing gravity and movement, aiding in balance and spatial orientation.