6.When interest rates increase, the duration of a 30-year bond selling at a discount:

A)   increases.

B)   does not change.

C)   decreases.

D)   increases at first, then declines.

7.If bond prices fall 5 percent in response to a 0.5 percent increase in interest rates, what is the bond's effective duration?

A)   -10.

B)   +5.

C)   +10.

D)   -5.

8.The price of a bond is equal to $101.76 if the term structure of interest rates is flat at 5 percent. The following bond prices are given for up and down shifts of the term structure of interest rates. Using the following information what is the effective duration of the bond?

Bond price: $98.46 if term structure of interest rates is flat at 6 percent
Bond price: $105.56 if term structure of interest rates is flat at 4 percent

A)   1.56.

B)   3.49.

C)   1.74.

D)   1.78.

9.An international bond investor has gathered the following information on a 10-year, annual-pay U.S. corporate bond:

§       Currently trading at par value

§       Annual coupon of 10%

§       Estimated price if rates increase 50 basis points is 96.99%

§       Estimated price is rates decrease 50 basis points is 103.14%

The bond’s duration is closest to:

A)   6.58.

B)   0.62.

C)   6.15.

D)   3.14.

10.An investor finds that for every 1 percent increase in interest rates, a bond’s price decreases by 4.21 percent compared to a 4.45 percent increase in value for every 1 percent decline in interest rates. If the bond is currently trading at par value, the bond’s duration is closest to:

A)   8.66.

B)   4.33.

C)   43.30.

D)   86.60.