When interest rates decrease, the duration of a 30-year coupon bond
normally:
decreases.
remains the same.
the answer cannot be determined without more information.
increases.
may increase or decrease, depending on whether the bond sells at a premium or
discount.
Which of the following bonds will have the longest duration?
15-year maturity and a 12% coupon.
10-year maturity and a 15% coupon.
20-year maturity and an 8% coupon.
20-year maturity and a 12% coupon.
An investor who expects increasing interest rates should purchase a
bond that has a _____ coupon and a _____ term to maturity.
zero, long
high, long
low, long
high, short
R’s 9% coupon is paid once per year. The bond’s yield to maturity is
12% and its duration is 15 years. What will be the percentage change
in bond R’s price if its yield to maturity increases by 20 basis points?
–0.268%
2.68%
–2.68%
0.268%
It is impossible to solve this problem without knowing Bond R’s current price.
Which of the following bonds has the shortest duration?
Coupon = 15%, time to maturity = 20 years, yield to maturity = 10%
Coupon = 15%, time to maturity = 15 years, yield to maturity = 10%
Coupon = 12%, time to maturity = 20 years, yield to maturity = 10%
Coupon = 10%, time to maturity = 20 years, yield to maturity = 10%
Coupon = 15%, time to maturity = 15 years, yield to maturity = 15%
