1- Which for of duration is a good measure of a bond's price sensitivity to interest rate changes? Explain...

a) Macualay

b) Modified

2- Thom Jones Holds a bond for 20 years. The bond has a maturity of 20 years. If the prevailing interest rate changes 8 times during the years Mr. Jones holds the bond, how many times does his yield change? Explain...

a) 10 b) 8 c) zero d) Many e) None of the above

3- Thom Jones Holds a bond for 10 years. The bond has a maturity of 20 years. If the prevailing interest rate changes 8 times during the 10 years Mr. Jones holds the bond, how many times does his yield change? Explain...

a) 10 b) 8 c) zero d) Many e)None of the above

4- If a bond's coupon rate is greater than its yield, the present value is less than the par value. Explain....

a) True b) False

5- As interest rates decrease, the value of all bonds increases. Explain...

a) True b) False