Rank the interest sensitivity of the following from most sensitive to an interest rate change to the least sensitive:

8% coupon, noncallable 20 year maturity, par bond

9% coupon, currently callable 20 year maturity, premium bond

Zero coupon, 30 year maturity bond

	a.	III, II, I
	b.	III, I, II
	c.	II, III, I
	d.	I, II, III
	e.	II, I, III

The duration of a bond normally increases with an increase in

I. term-to-maturity II. yield-to-maturity. II. coupon rate

	a.	II and III only
	b.	I and III, but not II
	c.	I and II only
	d.	I, II and III
	e.	I only

An 8% (coupon), 30-year bond has a yield-to-maturity of 10% and a modified duration of 8.0 years. If the market yield drops by 15 basis points, what will be the percentage change in the bond's price?

	a.	1.20% decrease
	b.	1.15% decrease
	c.	2.43% decrease
	d.	1.53% increase
	e.	1.20% increase

Where Y = yield to maturity, the duration of a perpetuity would be

	a.	Y
	b.	Y/(1+Y)
	c.	-D/(1+Y)
	d.	(1+Y)/Y
	e.	1/Y

All else equal, bond price volatility is lower (less) for

	a.	Shorter maturity.
	b.	Lower default risk.
	c.	Lower coupon rates.
	d.	Zero coupon bonds.
	e.	Higher coupon rates.

Given its time to maturity is constant, the duration of a zero coupon bond is

	a.	Higher when the discount rate is lower.
	b.	Variable depending on the credit rating of the bond.
	c.	The same regardless of the discount rate.
	d.	Lowest when the discount rate is equal to the risk free rate.
	e.	Higher when the discount rate is higher.