26-77 Which of the Following Is an Example of a Negative

question 24

Multiple Choice

26-77 Which of the following is an example of a negative duration asset that is valuable as a portfolio-hedging device for an FI manager when included with regular bonds whose price-yield curves show the normal inverse relationship.

• A)PO strip.
• B)IO strip.
• C)Class B bonds
• D)Class Z bonds
• E)Class A bonds

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Definitions:

Absorption Costing

An accounting method that integrates all components of manufacturing expenses—materials, labor, and every overhead, be it variable or fixed—into the final product cost.

Variable Costing

An accounting approach where only variable production costs are assigned to inventory, distinguishing it from absorption costing by treating fixed overhead as a period cost.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a net income or loss.

Variable Costing

An accounting method that only assigns variable costs to inventory, excluding fixed manufacturing overhead costs.