1) The estimation for change in bond price using just bond duration measure is bad for large change in yield. Once we add the convexity measure on top of duration, we will be able to perfectly estimate the change in price.

Group of answer choices

True

False

2) Tax-exempt municipal bond will always have a lower yield than a comparable treasury security because it has additional tax benefits.

Group of answer choices

True

False

3) A bond is currently selling at 6% yield. Similar alternative investments available in the market with the identical risk profile are selling at 7% yield. Therefore, the bond is overpriced and there might be an arbitrage opportunity.

Group of answer choices

True

False

4) The following 2 bonds have a par value of $1,000 and pays interest semiannually.

Bond	Coupon Rate (%)	Number of Years to Maturity	Price
A	8	7	$948.90
B	0	10	$456.39

Find the yield to maturity for the 2 bonds and calculate their sum (i.e., add them up).

Group of answer choices

8.5%

9%

8%

17%

None of the above