Duration

Duration - Question 1 0.1 out of 0.1 points Which of the...

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Question 1 0.1 out of 0.1 points Which of the following are valid assumptions under the expectations theory? Answer Selected Answer: Correct Answer: Question 2 0.1 out of 0.1 points Which of the following is not proposed as an explanation for the term structure of interest rates: Answer Selected Answer: Correct Answer: Question 3 0.1 out of 0.1 points The yield curve shows the relationship between: Answer
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Selected Answer: the bond. Correct Answer: the bond. Question 4 0.1 out of 0.1 points Suppose that all investors expect that interest rates on a 1-year bond for the next 4 years will be as follows: Today interest rate for a 1- year bond = 5% Forward rate for a 1-year bond in 1 year = 7% Forward rate for a 1-year bond in 2 years = 9% Forward rate for a 1-year bond in 3 years = 10% What is the price of a 3- year zero coupon bond with a face value of $100? Answer Selected Answer: Correct Answer: Question 5 0.1 out of 0.1 points Calculate the expected holding period return for an investor who purchases a
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5.5% two-year bond and plans to sell it after one year. The purchase price is $97.350, the expected market rate for a one year bond in one year is 7.20% and the bond pays coupon interest annually. The bond has a $100 face value. Answer Selected Answer: Correct Answer: Question 6 0.1 out of 0.1 points Calculate the expected holding period return for an investor who purchases a 7.50% two-year bond and plans to sell it after one year. The purchase price in $102.000, the expected market rate for a one year bond in one year is 6.25% and the bond pays coupon interest semi- annually. The bond has a $100 face value. Coupons can be reinvested at 6% p.a. until the end of the holding
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period. Answer Selected Answer: Correct Answer: Question 7 0.1 out of 0.1 points Macquarie Bank purchased a large amount of Commonwealth Government Bonds (CGB). They wish to strip and repackage the coupon interest as individual zero-coupon bonds. According to their calculations, the term structure of interest rates suggests that the spot rate of a 2-year zero coupon bond is 10%. You would
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Duration - Question 1 0.1 out of 0.1 points Which of the...

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