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Chap016 - Chapter 16 Managing Bond Portfolios Multiple...

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Chapter 16 Managing Bond Portfolios 360 Multiple Choice Questions 1. The duration of a bond is a function of the bond's A) coupon rate. B) yield to maturity. C) time to maturity. D) all of the above. E) none of the above. Answer: D Difficulty: Easy Rationale: Duration is calculated by discounting the bond's cash flows at the bond's yield to maturity and, except for zero-coupon bonds, is always less than time to maturity. 2. Ceteris paribus, the duration of a bond is positively correlated with the bond's 3. Holding other factors constant, the interest-rate risk of a coupon bond is higher when the bond's:
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