Duration is a useful number because it combines the effects of maturity, coupon, and market rates to indicate how the price of the bond will change with a change in interest rates.

• A. True
• B. False

Duration analysis is subject to the assumption that all interest income can be reinvested at the market rate of interest.

• A. True
• B. False

As the yield to maturity on a bond increases, the duration also increases because of the effect of present value on duration.

• A. True
• B. False