Which of the following bonds has the shortest duration? a. 5 year zero coupon b. 5-year, 5% coupon c. 10-year zero coupon d. 10-year, 5% coupon

If a bond portfolio manager expects interest rates to fall, she will _______ the duration of her bond portfolio. a. shorten b. maintain c. increase d. none of the above

Suppose the yields on one-year government bonds are as follows: spot = .04; 1-year forward = .045; 2-year forward = .06. According to the expectations theory, what is the approximate (spot) yield on a 3-year government bond? a. 4.80% b. 4.81% c. 4.82% d. 4.83% e. 4.84%

Suppose the yields on government bonds are as follows: 1-year = .02; 2-year = .03; 3-year = .035. According to the expectations theory, what is the implied 2-year forward yield on a 1-year government bond? a. 3.0% b. 3.5% c. 4.0% d. 4.5%

e. 5.0%