Quiz Ch 11 – Bank’s Equity Risk and Duration Mismatch
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
When does a bank face market value of equity risk due to a duration mismatch between assets and liabilities?
When does a bank face market value of equity risk due to a duration mismatch between assets and liabilities?
In what ways can utilizing certainty-equivalent cash flows be advantageous?
Which of the following factors is considered in the best-case analysis of a proposed project?
What specific aspect of a bond does duration analysis primarily focus on?
How does a bond’s duration change with variations in coupon rates, assuming all other factors remain constant?
Under what circumstances will the realized rate of return surpass the promised yield for a bond with a 4-year duration held over a 6-year investment horizon?
How does a bond’s duration change with variations in yield to maturity, assuming all other factors remain constant?
What strategy involves swapping a bond for another with similar attributes but at a better price?
How is the realized rate of return affected by changes in interest rates when holding a bond with a 10-year duration for an investment horizon of 6 years?
What type of decision is it when a portfolio manager switches between Treasury and corporate bonds due to an increased yield spread?