Question: Select the answer/answers that is/are correct. (this question worth 2 points). 1) If bond A's duration is 4 and bond B is a 3-year, zero

Select the answer/answers that is/are correct. (this question worth 2 points).

1) If bond A's duration is 4 and bond B is a 3-year, zero coupon bond, then bond A is more volatile to interest rate changes compared to bond B.

2) Duration of a zero coupon bond equals to the YTM of the bond.

3) The price risk and the reinvestment risk offset each other if the duration equals to the maturity of the bond

4) Investors face price risk and reinvestment risk when market rates stay the same all the time.

5) Duration shows the weighted average time of receiving the par value of the bond

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