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Unformatted text preview: 4.88 d. 2.50 5) Which of the following bonds has the greatest interest rate risk? a. A 5% 10-year callable bond yielding 4% b. A 5% 10-year putable bond yielding 6% c. A 5% 10-year option free bond yielding 4% d. A 5% 10-year option free bond yielding 6% 6) A floating rate security will have the greatest duration: a. The day before the reset date b. The day after the reset date c. Just prior to maturity because it has the largest cash flow d. Never floating rate securities have a duration of zero 7) The duration of a bond is 5.47, and its current price is $986.30. Which of the following is the best estimate of the bond price change if interest rates increase by 2%? a.-$109.40 b.-$107.90 c. $107.90 d. $109.40...
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- Spring '10