单项选择题

A bond has a yield-to-maturity of 8%. If its effective duration is 7.41 years, a 25 basis point increase in rates will result in an approximate:

A．<TABLE border=0 cellSpacing=0 cellPadding=0 width="90%"><TBODY><TR><TD vAlign=top>A. 7.41% decrease in price. </TD></TR></TBODY></TABLE>
B．<TABLE border=0 cellSpacing=0 cellPadding=0 width="90%"><TBODY><TR><TD vAlign=top>B. 1.85% decrease in price. </TD></TR></TBODY></TABLE>
C．<TABLE border=0 cellSpacing=0 cellPadding=0 width="90%"><TBODY><TR><TD vAlign=top>C. 7.41% increase in price.</TD></TR></TBODY></TABLE>

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单项选择题An option-free bond has a market price and par value equal to $1000. For small changes in the yield of this bond, its price will change one dollar for every basis point change in the yield. What is the duration of the bond

A．<TABLE border=0 cellSpacing=0 cellPadding=0 width="90%"><TBODY><TR><TD vAlign=top>A. 5. </TD></TR></TBODY></TABLE>
B．<TABLE border=0 cellSpacing=0 cellPadding=0 width="90%"><TBODY><TR><TD vAlign=top>B. 10. </TD></TR></TBODY></TABLE>
C．<TABLE border=0 cellSpacing=0 cellPadding=0 width="90%"><TBODY><TR><TD vAlign=top>C.2.</TD></TR></TBODY></TABLE>

单项选择题Deep discount bonds have:

A. less call protection than bonds selling at par.
B. greater reinvestment risk than bonds selling at par.
C. greater price volatility than bonds selling at par.