Assume that the interest rates stay constant. The duration of the bond at time t = 0 is D. Show that the duration before the first coupon payment changes with time according to D – t.

The value of the interest rate depends on the --------- of the time period. Select one: a. length b. size c. minimum d. maximum

Some characteristics of the determinants of nominal interest rates are listed as follows. Identify the components (determinants) and the symbols associated with each characteristic: Characteristic Component Symbol This is the premium added to the real risk-free rate to compensate for a decrease in purchasing power over time.           It is based on the bond’s rating; the higher the rating, the lower the premium added, thus lowering the interest rate.           It is calculated by adding the inflation premium to r*.           It changes over time, depending on the expected rate of return on productive assets exchanged among market participants and people’s time preferences for consumption.           As interest rates rise, bond prices fall, and as interest rates fall, bond prices rise. Because interest rate changes are uncertain, this premium is added as a compensation for this uncertainty.           This premium is added when a security lacks marketability,…

At maturity the bond holders get back their principal. The length of time is called a. Coupon O b. Face value O c. Bond's term O d. Bond's yield

Which of the following measures the interest rate risk of a bond in dollars and cents? O Price Value of a Basis Point O Convexity O Modified Duration Duration.

The yield to maturity on a bond   a is fixed in the indenture. b is lower for higher-risk bonds. c is the required return on the bond. d is generally equal to the coupon interest rate.

The interest rate changes to i' in the second period. Evaluate the rates of return when you sell the bond after one period in the case of the change being (i) anticipated (ii) unanticipated. ? [P'

Assuming that the market and coupon rates remain constant till maturity; a.the bond's price will remain constant over time b.No option is correct c.the bond price will approach its market value over time d.the bond's price will approach its face value over time

The yield on a zero-coupon bond of maturity Tis equal to: the return on the bond each period, if the bond is held until maturity the expected return on the zero-coupon bond the forward rate for time T-1 the forward rate for time T the spot rate of interest

Can the price of bond B be determined using the PV function or any other function in excel? What is the EAR (effective annual rate) of these two bonds?