Duration is better way to compare cash flows

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Reference no: EM131444351

Duration is a better way to compare cash flows than simply comparing present values because

a. duration incorporates cash flow volatility

b. present value fails to incorporate the time of cash flows

c. when maturities differ among compared cash flows, present value inaccurately represents the yield to maturity

d. duration effectively treats cash flows as a perpetuity, incorporating the reinvestment rate

Reference no: EM131444351

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