Which of the following statements regarding duration is INCORRECT? O 1) Yield to Maturity is inversely related to duration, holding coupon and maturity constant. 2) Coupon is inversely related to duration, holding maturity and YTM constant 3) For all coupon-paying bonds, duration equals time to maturity. 4) Duration expands with time to maturity at a decreasing rate, holding coupon and YTM constant. Interest rate risk is composed of: 1) market risk and default risk. 2) price risk and credit risk. 3) price risk and reinvestment risk. 4) default risk and money risk. Question 30 (2 points) Saved A portfolio is said to be immunized if: 1) the present value of the cashflows equals the principal. 2) the duration of the portfolio is equal to the term. 3) the present value of the cashflows is greater than the principal. 4) the duration of the portfolio is equal to the investment horizon. Convexity is used to correct the approximate percentage change in bond value, calculated using modified duration. 1) True 2) False Consider Example 18-11 and Table 18-1. Let's say the price is $950.00 rather $974.17 (so the YTM goes to 6.1% from 5.6%). What happens to duration? O 1) It increabes substantially. 2) It increases only a little amount. 3) it decreases substantially. 4) it decreases only a little amount