As Applied to Bonds, Duration Refers to

question 14

Multiple Choice

As applied to bonds, duration refers to

• A) the average maturity of a diversified portfolio of corporate bonds.
• B) the point in the life of a bond when its price exactly offsets its reinvestment risk.
• C) the average price and annual reinvestment rate of return for a bond.
• D) the point in the life of a bond when its yield-to-maturity equals its expected yield.

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Definitions:

Special Price

A temporarily reduced price offered on goods or services, often used as a promotional or marketing strategy.

Net Income

The net income of a business following the subtraction of all costs and taxes from its earnings.

Absorption Costing

A costing method that integrates all expenses related to the manufacturing process, including direct materials, direct labor, and overhead costs, both variable and fixed, into the final product cost.

Required Rate

Often refers to the minimum expected rate of return on an investment, taking into account the risk level.