You are provided with the following characteristics for different bonds. Assume that the yield-to-maturity for all bonds is 8%.

1. Rank the given bonds from the lowest MV0 to the highest: *

a. Alpha, Beta, Gamma

b. Gamma, Beta, Alpha

c. Beta, Alpha, Gamma

d. Gamma, Alpha, Beta

e. None of the above

2. The durations of Gamma, Beta and Alpha Bonds in years are respectively: *

a. 2.86, 2.76, 3.58

b. 10.97, 5.53, 2.78

c. 2.78, 5.53, 10.97

d. 3.58, 2.76, 2.86

e. None of the above

3. The convexity of bond Gamma is equal to: *

a. 10.5

b. 9.6

c. 9.3

d. 14.74

e. None of the above

4. Assume that the YTM decreases by 1%, which of the following statements is TRUE about Gammas bond? *

a. Its modified duration is more than the old duration by 3 months and 5 days.

b. Its new price is higher than the old price by more than $20

c. The percentage variation in its price is lower than 2.5%

d. All of the above

e. None of the above

Bonds Alpha & Co. Coupon Rate Maturity 6.5% paid quarterly 3 years 6.5% paid semiannually 3 years 8% paid annually 4 years Beta Corp. Gamma Inc