Question

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

Answer 1

Answer:

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.