Quiz Ch 11 – Duration Contrast
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
Which bond exhibits the shortest duration keeping YTM constant at 10%?
Which bond exhibits the shortest duration keeping YTM constant at 10%?
Which bond has the longest duration with everything else unchanged?
What impact does the duration rule have on bond value after a yield change?
What bond type do pension fund managers typically hold to minimize interest rate risk effectively?
Which factors lead to a rise in bond duration?
What financial principle is exemplified by the 2012 situation, where the S&P 500 saw a 16% increase, necessitating substantial contributions to pension funds due to low-interest rates?
How can an insurance firm meet annuity obligations effectively?
What strategy might a savvy bond manager use to maximize capital gain with market economists predicting a rise in interest rates?
How can banks best mitigate interest rate risk?
Describe how weights are determined in Macaulay duration calculation. The weight for year t is __________.