In the Case of an Unanticipated Inflation

question 112

Multiple Choice

In the case of an unanticipated inflation:

• A) creditors with an unindexed contract are hurt because they get less than they expected in real terms.
• B) creditors with an indexed contract gain because they get more than they contracted for in nominal terms.
• C) debtors with an unindexed contract do not gain because they pay exactly what they contracted for in nominal terms.
• D) debtors with an indexed contract are hurt because they pay more than they contracted for in nominal terms.

Grasp the concept of immunization and its purpose in bond portfolio management.

Compare and contrast duration and interest-rate risk across different types of bonds.

Understand the calculation and application of duration in bond portfolio immunization and liability matching.

Recognize the limits and assumptions underlying duration and its modifications.

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Definitions:

Violent Television

Television programming that contains scenes of physical aggression or threats of violence.

Violence Acceptability

The extent to which individuals or societies find the use of physical force or aggression as an acceptable means to achieve an end.

Abused Children

Minors who have suffered from physical, emotional, sexual, or neglectful acts by a caregiver or other person, resulting in harm, potential for harm, or threat of harm.

Abusive Parents

Parental figures who engage in actions or behaviors that cause physical, emotional, or psychological harm to their children, leading to lasting effects on the child's well-being.