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:

M'Naghten Rule

A legal standard used to determine whether a defendant was insane at the time of committing a crime and therefore not responsible for their actions.

Insanity

A legal and psychological term referring to a mental disorder that prevents an individual from distinguishing between right and wrong, or impairs the ability to conduct daily activities normally.

Not Guilty

A legal plea or court's verdict indicating that an accused individual is not responsible for committing the crime in question.

Involuntary Commitment

The practice of confining a person to a psychiatric hospital or ward against their will or without their consent, based on the assessment that they pose a risk to themselves or others.