The Duration of a Portfolio of Bonds Can Be Calculated

question 13

Multiple Choice

The duration of a portfolio of bonds can be calculated as _______________.

• A) the coupon weighted average of the durations of the individual bonds in the portfolio
• B) the yield weighted average of the durations of the individual bonds in the portfolio
• C) the value weighed average of the durations of the individual bonds in the portfolio
• D) averages of the durations of the longest and shortest duration bonds in the portfolio

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Definitions:

Fair Value Adjustment

A financial process that alters the reported value of an asset or liability to reflect its current market value.

Common Stock C

A classification of common stock that may have specific rights, privileges, or restrictions compared to other classes.

Gain on Sale

The financial profit realized from the sale of an asset, which exceeds its purchase price.

Available-for-Sale Securities

Financial assets that are not classified as held-to-maturity or trading securities, and can be sold in the short-term to meet liquidity needs.