35) A three-year bond with a yield of 13% (continuously compounded) pays a 5% coupon at the end of each year. The face value of the bond is $100. What is the bond's convexity? 8.07 8.31 8.45 8.88 36) Duration measures: Measures the sensitivity of percentage changes in the bond's price to changes in its yield The time it takes to recover half the present value of all future cash flows from the bond Neither A, nor B Both A and B Banks are exposed to liquidity funding risk because: They transform liquid deposits (liabilities) to illiquid loans (assets) They have problems meeting their depositors' demands to withdraw money from their accounts They are unable to borrow from the lender of last resort, the central bank A, B and C are all true Which of the following statements is not true: Liquidity black holes arise in situations where liquidity has dried up because everyone wants to sell and nobody wants to buy in a particular market In good economic times with the general price level of assets on the rise, the leveraging cycle anlows an investor to increase leverage initially, only to end up with decreased leverage later on Liquidity black holes are an example of irrational exuberance. None of the alternatives What is the proportional bid-offer spread of 100 shares of Google with bid $20 and ask $30? 0.4 0.5 0.33 0.6 40) Price fluctuations that result from external factors arising out of political, legal, or aggregate domestic or international changes in economic conditions is a source of: Default risk 0.00 Liquidity risk Systematic risk Market risk