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1. Which of the following statements is true?
a. An increase in coupons increases the duration of the bond.
b. The longer the maturity of a bond, the greater will be its duration.
c. An increase in the interest rate decreases the duration of the bond.
d. Duration is a measure of the sensitivity of the equities.
2. All other things equal, which of the following bond price is more sensitive to interest rate changes?
a. a 10 year bond with a 10% coupon
b. a 20 year bond with a 7% coupon
c. a 20 year bond with a 10% coupon
d. a 30 year bond with 7% coupon
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