1. Which one of the following statements is correct?
A. The magnitufe of price increases is greater than that of price decreses for a given absolute change in the yield to maturity.
B. The time to maturity has no effect on the response of a bond's price to a change in the bond's yield to maturity.
C. Bonds prices are directly related to bond yields.
D. Short-term bonds are more interest rate sensitive than long-term bonds.
E. High-coupon bonds are more interest rate sensitive than low-coupon bonds.
2. Which one of the following statements is correct concerning Maculay duration?
A. The duration of a zero coupon bond is equal to one plus the time to maturity.
B. Duration of 20 to 25 years are quite common.
C. The duration of a coupon bond is less than that of a zero coupon bond given equal maturity dates.
D. The duration of a coupon bond is a linear function between the time to maturity and the duration.