Bond Valuation, Bond Theorems, Convexity
Check your understanding of bond features, theories, bond price, interest rate effect, yield, duration, convexity, immunization.

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Which of the following would cause the required return on a bond to increase, everything else held equal?
1 point
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R’s 9% coupon is paid once per year. The bond’s yield to maturity is 12% and its duration is 15 years. What will be the percentage change in bond R’s price if its yield to maturity increases by 20 basis points?
2 points
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Interest rates and bond prices
1 point
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The contract between a bond issuer and a bondholder is called:
1 point
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When interest rates decrease, the duration of a 30-year coupon bond normally:
1 point
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In the United States, most bonds pay interest_______ a year, while many European bonds pay interest________a year.
1 point
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What is the purchase price of a bond that has 5 years and 6 months until it matures? The face value of the bond is $2000 and the coupon rate is 6.2% compounded semi-annually. The yield rate is 7.5% compounded semi-annually.
5 points
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Which of the following might be found in a bond indenture?
1 point
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Which of the following bonds will have the longest duration?
1 point
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When the market's required rate of return for a particular bond is much less than its coupon rate, the bond is selling at:
1 point
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If a bond sells at a high premium, then which of the following relationships hold true? (P0 represents the price of a bond and YTM is the bond's yield to maturity.)
1 point
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An investor who expects increasing interest rates should purchase a bond that has a _____ coupon and a _____ term to maturity.
1 point
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The expected rate of return on a bond if bought at its current market price and held to maturity.
1 point
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What's the value to you of a $1,000 face-value bond with an 8% coupon rate when your required rate of return is 15 percent?
1 point
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If an investor may have to sell a bond prior to maturity and interest rates have risen since the bond was purchased, the investor is exposed to
1 point
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Which of the following terms describes strategies designed to ensure that the market values of assets always exceed the market values of liabilities by a specified amount?
1 point
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Which of the following causes a lower required return on a bond?
1 point
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Bonds rated double A and higher are called:
1 point
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