投资学第7版Test
Bank答案16
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Multiple Choice Questions
1. The duration of a bond is a function of the bond's A) coupon rate. B) yield to maturity. C) time to maturity. D) all of the above. E) none of the above.
Answer: D Difficulty: Easy Rationale: Duration is calculated by discounting the bond's cash flows at the bond's
yield to maturity and, except for zero-coupon bonds, is always less than time to maturity.
2. Ceteris paribus, the duration of a bond is positively correlated with the bond's A) time to maturity. B) coupon rate. C) yield to maturity. D) all of the above. E) none of the above.
Answer: A Difficulty: Moderate Rationale: Duration is negatively correlated with coupon rate and yield to maturity.
3. Holding other factors constant, the interest-rate risk of a coupon bond is higher when
the bond's: A) term-to-maturity is lower. B) coupon rate is higher. C) yield to maturity is lower. D) current yield is higher. E) none of the above.
Answer: C Difficulty: Moderate Rationale: The longer the maturity, the greater the interest-rate risk. The lower the
coupon rate, the greater the interest-rate risk. The lower the yield to maturity, the greater the interest-rate risk. These concepts are reflected in the duration rules; duration is a measure of bond price sensitivity to interest rate changes (interest-rate risk).
4. The \ A) times the change in interest rate.
B) times (one plus the bond's yield to maturity).
C) divided by (one minus the bond's yield to maturity). D) divided by (one plus the bond's yield to maturity). E) none of the above. Answer: D Difficulty: Moderate Rationale: D* = D/(1 + y)
5. Given the time to maturity, the duration of a zero-coupon bond is higher when the discount rate is A) higher. B) lower.
C) equal to the risk free rate.
D) The bond's duration is independent of the discount rate. E) none of the above. Answer: D Difficulty: Moderate
Rationale: The duration of a zero-coupon bond is equal to the maturity of the bond. 6. The interest-rate risk of a bond is
A) the risk related to the possibility of bankruptcy of the bond's issuer.
B) the risk that arises from the uncertainty of the bond's return caused by changes
in interest rates.
C) the unsystematic risk caused by factors unique in the bond. D) A and B above. E) A, B, and C above. Answer: B Difficulty: Moderate
Rationale: Changing interest rates change the bond's return, both in terms of the price of the bond and the reinvestment of coupon payments.
投资学第7版testbank答案16
