1. An investment bank holds a considerable position in a \7 annual coupon paying bond. The bond's yield-to-maturity is \8. The settlement date is 83 days into the 360 - day year. The approximate modified duration is 9 years and approximate convexity is 105 . What is the estimated convexity-adjusted pereentage price change resulting from a 100 bps decrease in the yicld-to-maturity? A. 0.0875 B. 0.0925 C. 0.0953 D. 0.0102 2. Financial assets permit all of the following except A. consumption timing. B. allocation of risk. C. separation of ownership and control. D. elimination of risk. 3. In the mean-standard deviation graph, which one of the following statements is true regarding the indifference curve of a risk-averse investor? Security market line A. It is the locus of portfolios that have the same expected rates of return and different standard deviations. B. It is the locus of portolios that offer the same utility according to returns and standard deviations. C. It connects portfolios that offer increasing utilities according to returns and standard deviations. D. None of the options 4. Assume an investor with the following utility function: \\( \\mathrm{U}=\\mathrm{E}(\\mathrm{r})-3 / 2\\left(\\sigma^{2}\ ight) \\). To maximize her expected utility, she would choose the asset with an expected rate of return of and a standard deviation of , respectively. A. \12 B. \10 C. \10 D. \8 5. Which statement is true regarding yield curve? A. Yield curve is a plot of yield to maturity as a function of time to maturity nvestment and Portfolio Management - Page 2 of 15