Question 1

Because of convexity,when interest rates change the actual bond price will ____________ the bond price predicted by duration.

Accepted Answer

A)   always be higher than
B)   sometimes be higher than
C)   always be lower than
D)   sometimes be lower thanE) None of the above
F) All of the above

Question 2

You have purchased a Guaranteed Investment contracts (GICs) from an insurance firm that promises to pay you a 5% compound rate of return per year for 6 years.If you pay $10,000 for the GIC today and receive no interest along the way you will get __________ in 6 years (to the nearest dollar) .

Accepted Answer

A)   $12,565
B)   $13,000
C)   $13,401
D)   $13,676E) None of the above
F) B) and C)

Question 3

All else equal,bond price volatility is greater for __________.

Accepted Answer

A)   higher coupon rates
B)   lower coupon rates
C)   shorter maturity
D)   lower default riskE) C) and D)
F) B) and C)

Question 4

Duration facilitates the comparison of bonds with differing ___________.

Accepted Answer

A)   default risk
B)   conversion ratios
C)   maturities
D)   yields to maturityE) B) and D)
F) B) and C)

Question 5

Immunization of coupon paying bonds is not a passive strategy because
I.the portfolio must be rebalanced every time interest rates change
II.the portfolio must be rebalanced over time even if interest rates don't change
III.convexity implies duration based immunization strategies don't work

Accepted Answer

A)   I only
B)   I and II only
C)   II only
D)   I, II and IIIE) B) and C)
F) B) and D)

Exam 11: Managing Bond Portfolios

All else equal,bond price volatility is greater for __________.

Correct Answer
verified

Immunization of coupon paying bonds is not a passive strategy because I.the portfolio must be rebalanced every time interest rates change II.the portfolio must be rebalanced over time even if interest rates don't change III.convexity implies duration based immunization strategies don't work

Correct Answer
verified

You have purchased a Guaranteed Investment contracts (GICs) from an insurance firm that promises to pay you a 5% compound rate of return per year for 6 years.If you pay $10,000 for the GIC today and receive no interest along the way you will get __________ in 6 years (to the nearest dollar) .

Correct Answer
verified

Duration facilitates the comparison of bonds with differing ___________.

Correct Answer
verified

Because of convexity,when interest rates change the actual bond price will ____________ the bond price predicted by duration.

Correct Answer
verified

Exam 11: Managing Bond Portfolios

All else equal,bond price volatility is greater for __________.

Correct AnswerverifiedShow Answer

Immunization of coupon paying bonds is not a passive strategy because I.the portfolio must be rebalanced every time interest rates change II.the portfolio must be rebalanced over time even if interest rates don't change III.convexity implies duration based immunization strategies don't work

Correct AnswerverifiedShow Answer

You have purchased a Guaranteed Investment contracts (GICs) from an insurance firm that promises to pay you a 5% compound rate of return per year for 6 years.If you pay $10,000 for the GIC today and receive no interest along the way you will get __________ in 6 years (to the nearest dollar) .

Correct AnswerverifiedShow Answer

Duration facilitates the comparison of bonds with differing ___________.

Correct AnswerverifiedShow Answer

Because of convexity,when interest rates change the actual bond price will ____________ the bond price predicted by duration.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified