38. The duration of a $1000, 2-year, 6% coupon bond (interest paid annually)

is _____ when market rates are 8%. The 8% PV factors are: .9259 1 YR; .8573 2 YR

a. 2.036 b. 1.971 c. 1.94 d. 1.856

39. As bond maturity _________, so does the _________ and ________.

a. decreases; coupon rate; market price.

b. decreases; duration; face value.

c. increases; duration; price variability.

d. increases; market price; coupon rate.