For Large Interest Rate Declines, Duration ___________ the Increases in the Bond's

question 20

Multiple Choice

For large interest rate declines, duration ___________ the increases in the bond's price, and for large interest rate decreases, it ____________ the decline in the bond's price.

• A) underpredicts; overpredicts
• B) overpredicts; underpredicts
• C) underpredicts; underpredicts
• D) overpredicts; overpredicts

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Definitions:

Economies Of Scale

Cost advantages reaped by companies when production becomes efficient, leading to a decrease in the per-unit cost as output increases.

Diseconomies Of Scale

The situation when a firm's costs per unit increase as it produces more output, opposite of economies of scale.

ATC Curve

A graphical representation of the average total costs of production at different levels of output in economics.

AVC Curve

The average variable cost curve, which shows a firm's average variable costs of production at different levels of output.