13.Contingent immunization (a) uses the immunization amount as a benchmark to see if the manager can continue to actively manager. (b) allows the manager to actively manage at all time. (c) combines active and passive bond management at the same time. (d) requires duration matching always. 14.The concepts of immunization and duration are limited by the assumption that the bonds will (a) default at some future date. (b) not default or be called before maturity. (c) not be callable bonds. (d) have a realized yield that equals the coupon rate? 15.A 5 year, zero-coupon bond has a maturity of $1,000 and a present market price of $713. Its duration in years is (a) 4.7. (b) 5. (c) 4.2. (d) 3.9. 16.A bond has a duration of 8 years and a present yield-to-maturity of 8%. If the yield to-maturity rises to 10%, the approximate bond price change would be (a) +7.9%. (b) 25%. (c) 14.8%. (d) 12.9%. 17.Positive convexity on a bond implies that (a) price increase at a faster rate as yields drop, than they decrease as yield increases. (b) the direction of change in yield is directly related to change to price. (c) price changes are the same for both increase and decrease in yields. (d) price increase and decrease at a faster rate than the change in yield. 18.Which of the following statement about the Macaulay duration of a zero-coupon bond is true? The Macaulay duration of a zero-coupon bond (a) is equal to one-half the bonds maturity in years. (b) is equal to the bonds maturity in years divided by its yield to maturity. (C) cannot be calculated because of the lack of coupons. (b) is equal to the bonds maturity in years. 19.A four-year $1,000 bond will pay $60 in interest at the end of each year. With a yield-to-maturity of 8%, its present market price is $934. Its duration is (a) 1.88 years. (b) 3.66 years. (c) 3.28 years. (d) 4.32 years. 20.A pension plan will have a cash outflow in 3 years. They can invest in 2 year bonds with duration of 1.7 years and 4 year bonds with a duration of 3.5 years. To immunize the portfolio, the proportion invested in the 4 year bonds should be (a) 0.44. (b) 0.28. (c) 0.5. (d) 0.72.