Duration Is

question 8

Multiple Choice

Duration is

• A) the elasticity of a security's value to small coupon changes.
• B) the weighted average time to maturity of the bond's cash flows.
• C) the time until the investor recovers the price of the bond in today's dollars.
• D) greater than maturity for deep discount bonds and less than maturity for premium bonds.
• E) the second derivative of the bond price formula with respect to the ytm.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activities within a short time.

Variable Costs

Expenses which are dependent on the volume of activity within a business.

Profit-Volume Chart

A graphical representation that shows the relationship between a company's profits and its volume of sales, illustrating the break-even point and profit levels at different sales volumes.

Cost-Volume-Profit Chart

A chart that graphically shows sales, costs, and the related profit or loss for various levels of units sold. Also called a break-even chart.