Indexing of bond portfolios is difficult because
A) the number of bonds included in the major indexes is so large that it would be difficult to purchase them in the proper proportions.
B) many bonds are thinly traded, so it is difficult to purchase them at a fair market price.
C) the composition of bond indexes is constantly changing.
D) All of the options are true.
Correct Answer:
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Q17: Ceteris paribus, the duration of a bond
Q18: Holding other factors constant, the interest-rate risk
Q19: Holding other factors constant, the interest-rate risk
Q20: Ceteris paribus, the duration of a bond
Q21: Identify the bond that has the longest
Q23: Duration
A) assesses the time element of bonds
Q24: Cash flow matching on a multiperiod basis
Q25: Duration measures
A) weighted-average time until a bond's
Q26: An 8%, 15-year bond has a yield
Q27: Par-value bond XYZ has a modified duration
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