Which of the Following Statements Are True? I) Holding Other

question 1

Multiple Choice

Which of the following statements are true? I) Holding other things constant, the duration of a bond decreases with time to maturity.
II) Given time to maturity, the duration of a zero-coupon increases with yield to maturity.
III) .Given time to maturity and yield to maturity, the duration of a bond is higher when the coupon rate is lower.
IV) Duration is a better measure of price sensitivity to interest-rate changes than is time to maturity.

• A)I only
• B)I and II
• C)III only
• D)III and IV

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Definitions:

Demand Equation

A mathematical representation of the relationship between the quantity of a good demanded and various factors affecting it such as price, income, and the price of related goods.

Downsloping Demand

A concept in economics that describes the inverse relationship between the price of a good and the quantity demanded, typically illustrated by a downward-sloping demand curve.

Upsloping Supply

A supply curve that shows an increase in the quantity supplied as the price increases, typical of most goods.

Resource Prices

The cost or price of raw materials, labor, and other inputs required for the production of goods and services.