chap10_exercise - B) more; higher C) less; lower D) None of...

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Chapter 10 Selected Problems: From textbooks 1, P346 #1 2, P346 #2 3, P346 #7 4, P347 #11 Additional multiple choice questions: 1. All other things equal, which of the following has the longest duration? A) a 30 year bond with a 10% coupon B) a 20 year bond with a 9% coupon C) a 20 year bond with a 7% coupon D) a 10 year zero coupon bond 2. An increase in a bond's yield to maturity results in a price decline that is ________ the price increase resulting from a decrease in yield of equal magnitude. A) greater than B) equivalent to C) smaller than D) The answer is indeterminate 3. Bond prices are _______ sensitive to changes in yield when the bond is selling at a _______ initial yield to maturity. A) more; lower
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Unformatted text preview: B) more; higher C) less; lower D) None of the above answers are correct 4. Duration is a concept that is useful in assessing a bond's __________. A) credit risk B) liquidity risk C) interest rate risk D) None of the above 5. Duration always __________ as time to maturity increases for _______________. A) increases; bonds selling at a discount B) increases; bonds selling at or above par C) decreases; all bonds D) More than one of the above 6. A bond presently has a price of $1,030. The present yield on the bond is 8.00%. If the yield changes from 8.00% to 8.10%, the price of the bond will go down to $1,020. The duration of this bond is __________. A) -10.5 B) -8.5 C) 9.7 D) 10.5...
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This note was uploaded on 05/10/2008 for the course FIN 367 taught by Professor Han during the Spring '08 term at University of Texas at Austin.

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chap10_exercise - B) more; higher C) less; lower D) None of...

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