A more accurate measure of the change in bond price due to changes in yield to maturity can be found using both modified duration and __________.

A. Macaulay duration

B. conversion premium

C. time to maturity

D. convexity

One CBOT corn futures contract trades in units of 5,000 bushels and the minimum initial margin is $2,500 per contract. On July 17, 2013, the Sep '13 CBOT corn futures contract settled at $6.50 per bushel. Calculate the amount of leverage inherent in the futures contract using the minimum initial margin.

A.14

B. 15

C. 12

D. 13

Holding all else equal, an unexpected fall in interest rates will cause the value of a given outstanding call option to __________.

A. decrease

B. remain constant

C. increase

D. none of the above