FINAL STRETCH Flashcards
1
Q
Increase in Interest Rates causes Duration to _____
FIXED INCOME
A
DECREASE
WHEN YIELD INCR. PRICES DECR., THEREFORE PRICE VOLATILITY FALLS AS WELL.
2
Q
Which bonds have the higher priority of claims
FIXED INCOME
A
Secured Bonds
3
Q
func for %Change in Full Price of a Bond
FIXED INCOME
A
-Dur(change YTM) + (1/2)convex(change YTM)^2
4
Q
the measure of a bond’s price to a change in yield at a . SPECIFIC maturity is known as its ________.
FIXED INCOME
A
Key Rate (partial) Duration
5
Q
Portfolio Duration based on _________, instead of _______ is theoretically more sound.
FIXED INCOME
A
Cash Flow Yield; Weighted Average of Durations
