Which is true about the "duration" of bonds? A. The longer the term, the shorter the...
Which is true about the "duration" of bonds?
A. The longer the term, the shorter the duration.
B. The lower the yield, the shorter the duration.
C. For zero-coupon bonds, the term is the duration.
D. Duration is related to yield (or internal rate of return) of a bond.
Regarding bonds in the secondary market...
A. their prices are unrelated to the prevailing interest rate environment.
B. prices of bonds with more time to maturity are less sensitive to the prevailing interest rate environnment.
C. prices of bonds with less time to maturity are less sensitive to the prevailing interest rate environnment.
D. their prices are related to the prevailing interest rate environment only if they are not issued by the government.
Homework Answers
First
Answer C is correct. Zero coupon bonds has duration equal to maturity.
Second
Answer C is correct. Price of bond with less time to maturity has lesser sensitivity to change in interest rates as compared to bonds with more time to maturity.
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Which is true about the "duration" of bonds?
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Compared to bonds with shorter maturity, bonds with longer maturity respond dramatically to changes in interest rates. Bonds with a maturity that is as short as the holding period have interest-rate risk.
help with these mcq 23 Which of the following statements about duration is INCORRECT? a) Duration...
help with these mcq
23 Which of the following statements about duration is INCORRECT? a) Duration measures the average time between now and the time a bond's cash flows occur b) Bonds with longet duration have greater default risk c) The higher the face value the longer the duration, everything else equal d) The higher the coupon rate the lower the interest rate risk, everything else equal. (2 Marks) 24. Which of the following about yield to maturity (YTM) is...
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Compared to bonds with shorter maturity, bonds with longer maturity respond dramatically to changes in interest rates. Bonds with a maturity that is as short as the holding period have interest-rate risk.
help with these mcq
23 Which of the following statements about duration is INCORRECT? a) Duration measures the average time between now and the time a bond's cash flows occur b) Bonds with longet duration have greater default risk c) The higher the face value the longer the duration, everything else equal d) The higher the coupon rate the lower the interest rate risk, everything else equal. (2 Marks) 24. Which of the following about yield to maturity (YTM) is...
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Which of the following statements are correct concerning interest rate risk? I. The shorter the term, the greater the interest rate risk. Il. The longer the term, the greater the interest rate risk. IIl The lower the coupon rate, the greater the interest rate risk. IV. The higher the coupon rate, the higher the interest rate risk. Select one: a. I and IV only Ob. I, II, Il and IV only O c. Il and IV only O d. I...
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