Identify the Item Which Is Not Necessarily a Liability

question 43

Multiple Choice

Identify the item which is not necessarily a liability.

• A) Provision for holiday pay.
• B) Bank overdraft.
• C) Loan to employee.
• D) None of the above, i.e., all are necessarily liabilities.

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Definitions:

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, specifically reflecting how much the duration changes for a 1% change in yield.

Macaulay Duration

A measure of the weighted average time until a bond or fixed income portfolio's cash flows are received, used to gauge interest rate sensitivity.

Yield

The income returned on an investment, such as the interest or dividends received, typically expressed as a percentage of the investment’s cost or current market value.

Modified Duration

Modified Duration measures the sensitivity of the price of a bond or other debt instrument to a change in interest rates, indicating the percentage change in price for a parallel shift in rates.