1. Relative to the maturity of a bond, the duration is:

a.longer when interest rates exceed the coupon rate

b. longer when interest rates are less than the coupon rate

c. shorter when the bond does not pay coupon interest

d. shorter when the bond does pay coupon interest

2. If a firm makes a 1 for 5 rights issue when its shares are trading for $9.90 that will allow investors to purchase new shares for $8.00, by how much should the share price fall when they trade ex-rights if there are no other influences on the share price?

a. 32c

b. 38c

c. $1.58

d. $1.90

3. Calculate the duration of a portfolio consisting of 20 of band A, and 1000 of bond B, which have the attributes, listed in the table below.

Bond	Coupon rate	Face value	Price	Maturity	Duration
A	Nil	$100,000	$92,592.60	1 year	1 year
B	6%(Annual)	$1000	$907.54	6 years	5.17 years