Consider the following two Treasury securities: 6_Bond Price Modified duration (years) A $100 6 B $ 80 7 Which bond will have the greater dollar price volatility for a 25-basis-point change in interest rates? a. Bond A b. Bond B 7. The breaking down of a system to gain insight into its compositional sub-systems is known as: a. Top down approach b. Bottom-up approach c. Quantitative approach 8. Being a senior secured debt holder in an investment grade corporation assures the investor that she will incur no loss on a credit default. a. True b. False Calculate the requested measures in questions 10 through 12 for bonds A and B (assume that each bond pays interest semiannually): Bond A Bond B Coupon 8% 9% Yield to maturity 8% 8% Maturity (years) 2 5 Par $100.00 $100.00 Price $100.00 $104.055 9. What is the price value of a basis point for bond B only? a. 0.0181 b. 0.0416 c. 0.0597 d. 0.0746 10. Compute the approximate duration for bond A only using the shortcut formula by changing yields by 20 basis points a. 1.814948 b. 2.465732 c. 4.277338 d. 8.344402