1. If the YTM>coupon rate, then the__________

2. For a given absolute change in the YTM, a drop will produce a _________ change in the price compared to an increase in the YTM. This is the result of the convex shape of the bond curve.

3. Bonds with a higher coupon rate will experience a ___________ change in price due to an increase in YTM compared to a bond with lower coupon rate.

4. A bond with a shorter maturity will have a _________ change in price when interest rates rise compared to a bond with a longer maturity, all else remaining the same.

5. Macaulay duration measures__________.

6. Modified duration=___________(formula)

7. You own a 20year. 10% annual coupon bond with a YTM of 8%. If the YTM increases by 10 basis points(0.10%), what will be the change in price and the percentage change in price?

8. When we would use total return analysis, we have to consider two items. What are these items?

9. What is meant by valuing bonds as a package of cash flows? Include IO,PO, and the type of rate used.