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10. Which of the following bonds is the most exposed to interest rate risks? All bonds are issued today by the U.S. government. The yield
10. Which of the following bonds is the most exposed to interest rate risks? All bonds are issued today by the U.S. government. The yield curve is flat, and the yield-to-maturity for 20 year bonds is 10%. A. 10 year maturity, 8% semiannual coupon bond B. 10 year maturity, 8% quarterly coupon bond C. 10 year maturity, zero coupon bond D. 5 year maturity, zero coupon bond E. 5 year maturity, 8% semiannual coupon bond 11. Which of the following statements is (the most) incorrect? A. The immunization technique requires risk managers to match the durations of the liabilities and assets B. The duration matching method works well even though changes in interest rates are large C. The duration rule always underestimates the value of a bond following a change in its yield. D. If analysts consider convexity and duration, they can perform more sophisticated risk mngcecmcnts ofoolo omprdo the nly duratin. E. None of the option
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