Quiz Ch 11 – Active Management in Bond Immunization
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
Why does immunization of coupon-paying bonds NOT indicate portfolio manager inactivity?
Why does immunization of coupon-paying bonds NOT indicate portfolio manager inactivity?
What benefits do cash flow matching and dedicated strategies offer?
When does a bank face market value of equity risk due to a duration mismatch between assets and liabilities?
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?
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?
How does bond convexity impact the price change difference between yield decreases and yield increases of equal magnitude?
How does price sensitivity respond to rising interest rates with bonds above par?
Which bond type experiences no influence on its duration due to changes in the coupon rate?
Which bond exhibits the longest duration with YTM fixed at 10%?