114 #
© 2014 Pearson Canada Inc.#
All else equal, when interest rates ____, the duration of a coupon bond ____.
A) rise; falls
B) rise; increases
C) falls; falls
D) falls; does not change
Answer: A
Diff: 2 Type: MC Page Ref: 4.1A- 3
Topic: Questions for Web Appendix on Measuring Interest Rate Risk: Duration
Skill: Recall
Objective List: Appendix: Measuring Interest-Rate Risk: Duration
All else equal, the ____ the coupon rate on a bond, the ____ the bond's duration.
A) higher; longer
B) higher; shorter
C) lower; shorter
D) greater; longer
Answer: B
Diff: 2 Type: MC Page Ref: 4.1A- 3
Topic: Questions for Web Appendix on Measuring Interest Rate Risk: Duration
Skill: Recall
Objective List: Appendix: Measuring Interest-Rate Risk: Duration
An asset's interest rate risk ____ as the duration of the asset ____.
A) increases; decreases
B) decreases; decreases
C) decreases; increases
D) remains constant; increases
Answer: B
Diff: 2 Type: MC Page Ref: 4.1A- 5
Topic: Questions for Web Appendix on Measuring Interest Rate Risk: Duration
Skill: Recall
Objective List: Appendix: Measuring Interest-Rate Risk: Duration