Which of the following are true about the interest-rate sensitivity of bonds?

I) Bond prices and yields are inversely related. II) Prices of long-term bonds tend to be more sensitive to interest rate changes than prices of short-term bonds. III) Interest-rate risk is directly related to the bond's coupon rate. IV) The sensitivity of a bond's price to a change in its yield to maturity is inversely related to the yield to maturity at which the bond is currently selling.

I and II

I and III

I, II and IV

II, III and IV

I, II, III, and iv

I, II and III

A $1,000 par-valued bond now has a modified duration of 11. Which one of the following statement(s) regarding the bond is true?

If the market yield increases by 1% the bond's price will decrease by $55.

If the market yield increases by 1% the bond's price will increase by $55.

If the market yield increases by 1% the bond's price will decrease by $110.

If the market yield increases by 1% the bond's price will increase by $110.

None of the above.

A 6%, 30-year corporate bond, issued on Dec 31, 2018, was recently being priced to yield 8%. The Macaulay Duration for the bond is 8.4 years. You bought it with settlement today. Given this information, the bond's Modified Duration would be :

8.05

9.44

9.27

7.78

None of the above.

A corporate bond, with par at $1,000 and 7% coupon, is currently priced at $875. It is callable in 30 months with a 7.5% call premium. What is the bond's yield to call?

6.84%

7.13%

4.85%

7.90%

If convexity is 0, then the relationship between interest rates and bond prices would be a ___________________.

curved line sloping down

curved line sloping up

straight line

convex curve