Question 101 

Portfolio duration is best described as: 

A) a measure of a portfolio’s reinvestment risk.

B) the sensitivity of a portfolio’s value to equal changes in yield for all the bonds in the portfolio.

C) the sensitivity of a portfolio’s value to changes in the term structure of interest rates.

D) the arithmetic mean of the durations of each bond in a portfolio.

Question 102 

An investor holds Treasury Inflation Protection Securities that carry a 2.5% semiannual-pay coupon and have a current principal value of $101,000. If the annual inflation rate is 3% during the upcoming year, the principal value one year from today will be closest to:

A) $101,000. 

B) $104,030.

C) $104,053.

D) $103,525.

Question 103 

An investor who is valuing a Treasury security using the arbitrage-free valuation approach should most likely discount each cash flow using the: 

A) Treasury note yield that is specific to its maturity.

B) yield to maturity of the bond.

C) risk-free rate.

D) Treasury spot rate that is specific to its maturity.

Question 104 

Disadvantages of callable securities to the investor are least likely to include: 

A) uncertainty about the timing of cash flows.

B) the potential price appreciation of callable securities from decreases in market yields is less than that of option-free securities.

C) an increased likelihood of the principal being returned when interest rates decrease forcing the investor to reinvest at lower rates. 

D) that callable securities tend to be subordinated bonds and therefore have a lower probability of being repaid than ordinary securities.

Question 105 

Convexity is important because: 

A) it measures the volatility of non-callable bonds.

B) it can be used to indicate the optimal hedge ratio.

C) the slope of the price yield curve is not linear.

D) the slope of the callable bond price/yield curve is backward bending at high interest rates.

thanks

yoyo

^^

谢谢

mark

thanks

good