Question

For two bonds with equal coupons, duration would be higher for the bond with the shortest maturity.

• A. True
• B. False

For bonds of the same maturity and yield to maturity, the lower the coupon rate, the greater the duration.

• A. True
• B. False

Convexity is a measure of how much a bond's price-yield curve deviates from the linear approximation of that curve.

• A. True
• B. False

Answer 1

1.the given statement is FALSE because the duration of the bond would be highest for the bond with the highest maturity and it will have a direct relationship.

Duration would be lower for the bond with the shorter maturity

The given statement is FALSE.

2. Given statement is true because higher the coupon, lower the duration, and lower the coupon higher the duration.

It is about the inverse relationship between the both.

Given statement is TRUE.

3. Given statement is true because convexity is used to find out the deviation from the carvature.

Given statement is TRUE.