Duration, as Referred to in This Chapter, Is Defined As

question 22

Multiple Choice

Duration, as referred to in this chapter, is defined as:

• A) A measure of the extent to which different investments expose an investor to interest rate risk
• B) A measure of the weighted-average time required before all principal and interest is received on an investment
• C) A measure that takes into account both the size of cash flows and the timing of their receipt
• D) All of the above

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Definitions:

Annual Installments

Payments made once a year, often referring to the repayment schedule of a loan or similar financial obligation.

Equal Payments

Periodic payments of the same amount over the tenure of a loan or mortgage, covering both principal and interest.

Present Value

The contemporary financial worth of a looming sum of money or sequence of cash flows, with a specific rate of return in mind.

Annuity's Payments

Regular fixed payments from an annuity contract, typically made to the holder for life or a specified period.