Duration would NOT be an appropriate measure for: A Treasury bonds B Corporate bonds C Corporate common stock D Corporate preferred stock

Question

Jaelyn Sharp

Social Studies

14 November, 15:29

Duration would NOT be an appropriate measure for: A Treasury bonds B Corporate bonds C Corporate common stock D Corporate preferred stock

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Answers (1)

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Kendrick Alexander · Answer 1

Duration would not be an appropriate measure for corporate common stock.

Option: (C)

Explanation:

By considering duration as a measure, only the anticipated price movement of fixed income security for a given change in given market interest rate levels could be determined. On the other hand, duration would be an appropriate measure for bonds and preferred stocks as they are fixed income securities Whereas, common stock is not a fixed income security so the condition of duration would not be applicable.