Which of the following statements is correct for Yankee bonds?

A.Yankee bonds are bonds issued on NYSE by foreign firms for U.S. investors.

B.Yankee bonds are bonds issued on NYSE by U.S. firms for non-U.S. investors.

C.Yankee bonds are bonds issued overseas by U.S. firms for non-U.S. investors.

D.Yankee bonds are bonds issued overseas by foreign firms for U.S. investors.

Based on the clientele effect, which of the following investor groups is more likely to invest in municipal bonds?

A.Wealthy investors

B.Regular middle-income investors

C.Young investors

D.Lower income investors

Which of the following is a property for a premium semi-annual coupon bond?

A.Its current yield is higher than its yield to maturity.

B.Its BEY is less than its EAY.

C.Its coupon rate is less than its current yield.

D.Its coupon rate is less than its yield to maturity.

Based on the duration, when interest rates change, the actual new bond price will ___ the predicted new bond price.

A.Always be higher than

B.Be higher or lower than

C.Always be lower than

D.Always be the same as

Which of the following statements is not correct for duration?

A.A bond with a higher coupon rate usually has a longer duration.

B.A bond with a longer maturity usually has a longer duration.

C.A bond with a higher YTM generally has a shorter duration.

D.A strip usually has a duration equal to its time to maturity.

When the interest rate decreases, what will be the new duration of a 2-year zero coupon bond?

A.Remain constant

B.Decrease

C.Increase

D.Equal the discount rate

Using the duration to estimate the increase in a bond's value following a decrease in its yield usually ___ the actual increase in its value.

A.Under-estimates

B.Provides an accurate estimate of

C.Over-estimates

D.Is unable to predict, depending on whether the bond is a discount or premium bond.