1. How long must one wait (to the nearest year) for an initial investment of $1000 to triple in value if the investment earns 8% compound annually?
a. 9.81 years
b. 14.27 years
c. 22.01 years
d. 25.00 years
Explain
2. Bond A and B are identical expect that, bond B has a longer maturity. Which of these best explains the price impact of a fall in yield?
a) the impact will be greatest for A because its duration is longer
b) Bond A, because duration is shorter
c) Bond B, because duration is longer
d) Bond B, because duration is shorter