Which of the Following Statements Concerning Duration Are Correct

question 51

Multiple Choice

Which of the following statements concerning duration are correct?
I. Duration is a weighted-average life of a bond.
II. The Macaulay duration considers the timing of a bond's cash flows.
III. The Macaulay duration uses the YTM of a bond to discount the cash flows.
IV. For coupon bonds, duration will be less than the actual time to maturity.

• A) I, II and III only
• B) II, III and IV only
• C) I, III and IV only
• D) I, II, III and IV

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Definitions:

Range

The difference between the highest and lowest values in a set of data.

Standard Deviation

A measure that quantifies the amount of variation or dispersion of a set of data values, showing how much variation there is from the mean.

Variance

The measure of spread in a distribution, representing the average of the squared differences from the mean.

Measures of Center

Quantitative measures that describe the central tendency of a data set, including mean, median, and mode.