Duration Is a Direct Measure of the Interest Rate Sensitivity

question 71

Multiple Choice

Duration is a direct measure of the interest rate sensitivity of an asset or liability, which means that:

• A)the smaller the duration, the more sensitive the price of that asset or liability
• B)the larger the duration, the less sensitive the price of that asset or liability
• C)the larger the duration, the more sensitive the price of that asset or liability
• D)None of the listed options are correct.

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Definitions:

False Negative

A test result which incorrectly indicates that a particular condition or attribute is absent.

False Positive

An incorrect identification where a test result improperly indicates the presence of a condition (e.g., a disease) when it is not actually present.

Hopelessness Theory of Depression

A psychological theory suggesting that a pessimistic outlook, where one feels incapable of affecting the outcome of events, is a major cause of depression.

Abramson, Metalsky, Alloy

Researchers known for their contributions to the development of the hopelessness theory of depression, which emphasizes the role of negative expectations about the future in the development of depressive symptoms.