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HW_2_Questions_Chapter_3[1]

# HW_2_Questions_Chapter_3[1] - a 12 percent b-2 percent c-12...

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HW 2 Chapter 3 Chapter 3 End-of-Chapter Questions Chapter Questions 2, 3 Quantitative problems Questions 2-4, 8-9 Multiple Choice 1. A bond investor faces reinvestment risk if his or her holding period is a. Longer than the maturity of the bond. b. Identical to the maturity of the bond. c. Shorter than the maturity of the bond. d. None of the above. 2. If you expect the inflation rate to be 5 percent over the next year and a one-year bond has a yield to maturity of 7 percent, then the real interest rate on this bond is
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Unformatted text preview: a. 12 percent. b. -2 percent. c. -12 percent. d. 2 percent. 3 . Determine whether the below statements are true or false. I. Prices and returns for short-term bonds are less volatile than those for long-term bonds. II. The prices of longer-maturity bonds respond more dramatically to changes in interest rates. a. Both are false. b. Both are true. c. I is true, II false. d. I is false, II true....
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