For large interest rate increases, duration ___ the fall in security prices and for large interest rate decreases, duration

Question

2 years ago

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For large interest rate increases, duration ___ the fall in security prices and for large interest rate decreases, duration

___ the rise in security prices. a. Overpredicts, underpredicts b. Underpredicts, underpredicts c. Overpredicts, overpredicts d. Underpredicts, overpredicts

Business

1 answer:

kondor19780726 [428] · Answer 1 · 2023-05-24T03:54:32+03:00

Answer:

a. Overpredict, underpredict

Explanation:

Interest rate in domain of finance always bring a check to the economic growth, then the cost of borrowing will be forced to go up.

On the other hand when the interest rate decreases, the cost of borrowing is becomes low, and with this the interest that a consumer will pay will be low then they have much at hand.

It should be noted that For large interest rate increases, duration overpredict the fall in security prices and for large interest rate decreases, duration underpredict the rise in security prices

For large interest rate increases, duration _____ the fall in security prices and for large interest rate decreases, duration __

For large interest rate increases, duration ___ the fall in security prices and for large interest rate decreases, duration