Which of the Following Is NOT a Weakness of Duration

question 38

Multiple Choice

Which of the following is NOT a weakness of duration gap analysis?

• A) It is difficult to accurately compute duration.
• B) Each future cash flow must be discounted by the appropriate future interest rate.
• C) The duration of a portfolio must be constantly monitored.
• D) It is difficult to estimate the duration on zero coupon bonds.
• E) All of the above are weaknesses of duration gap analysis.

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Definitions:

Base Rate Information

Statistical data that represents the general probability of an event or characteristic within a population.

False Consensus

The belief that one's own opinions, beliefs, or behaviors are more common in the general population than they actually are.

External Attribution

The method of assigning the reason for one's own or other people's actions to external elements or circumstances.

Illusory Correlation

The tendency to perceive a connection between variables, typically events or behaviors, where no such relationship exists.