Quiz Ch 11 – Pure Yield Pickup Swap Mechanics
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
Which bonds swap in yield pickup swaps?
Which bonds swap in yield pickup swaps?
Sort the bonds in terms of their responsiveness to fluctuations in interest rates, starting with the most reactive to the least reactive:
What would happen to the modified duration compared to its original value if the bond’s maturity were below 10 years?
What change would occur in the modified duration compared to its original value with Steel Pier Company bonds, if the bond’s coupon were below 10%?
Who would find the target date of immunization most relevant?
What is the definition of convexity for a bond?
What concept does bond duration quantify?
What action should you take regarding the Xerox and Canon bonds with an expectation of rising interest rates?
How could a bond manager exploit a hump in the yield curve at the 5-year point?
How does a change in a bond’s yield to maturity affect its price compared to an equal-magnitude yield decrease?