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Modified duration for zero-coupon bond are equal

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Reference no: EM131883766

1. Consider these statements:

Statement 1: The Macaulay duration and Modified duration for a zero-coupon bond are equal.

Statement 2: For option-free bonds, the convexity effect is a decrease in the value of the bond compared to the expected price effect of duration alone.

Which statements are correct?

Both statements are correct.

Both statements are not correct.

Only statement 1 is correct.

Only statement 2 is correct.

2. Statement 1: When issuing debt, a company may use a sinking fund arrangement as a means of reducing the bond's credit risk.

Statement 2: Compared with developed markets bonds, emerging markets bonds most likely offer lower yields.

Both statements are correct.

Both statements are not correct.

Only statement 1 is correct.

Only statement 2 is correct.

Reference no: EM131883766

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