Question 19

a. I, II, III and IV b. I and II only III and IV only d.) II and III only ecline 18. Interest Rate Sensitivity An increase in a bond's yield to maturity results in a smaller price d than the gain associated with a decrease in yield. This result is due to a. the nonlinear relationship between bond prices and interest rates the inverse relationship between bond prices and interest rates the relationship between bond maturity and price sensitivity the relationship between the size of the coupon and price sensitivity b. c. d. 19. Interest Rate Sensitivity Which of the following variables affect the change in a bond's price when interest rates changed everything else equal? I. Bond II. Bond rating III. Bond coupon IV. Current yield to maturity maturity a. I, II and IV only b. I and III only c. I.III and IV only d. I, II, III and IV 20. Calculating Duration A 5 year annual payment bond has a 5% coupon, a $1,000 par and a 7% promised yield to maturity. If the bond's price is $918.00, what is the bond's duration