QUESTION 13 Reinvestment risk is least likely A) minimized with zero-coupon bond issues. B) more problematic for those investors with longer time horizons C) more problematic when the current coupons being reinvested are relatively small O A OB QUESTION 11 Jefferson Blake, CFA, believes there is a good opportunity to purchase an option-free 4% annual pay bond with three years left until maturity, a zero-volatility spread of 40 basis points, and a par value of $1,000 Blake observes that 1-year, 2-year, and 3-year government bond spot rates are currently 4.0%, 4.5%, and 4.75%, respectively. The maximum price Blake should be willing to pay for the bond is closest to A) $940. B) $970 c) $980. QUESTION 12 An investor with an investment horizon of 5 years has purchased a 15-year 6% coupon bond at par. The bond has a modified duration of 9.8. The duration gap for this investor is closest to A) -42 B) 48 C) 54