Fixed Income - Fixed Income Section 2
36. For a single coupon bond with constant yield as time passes during the coupon period:
- Option : B
- Explanation : As time passes during the coupon period, the Macaulay duration declines smoothly and then jumps upward after the coupon is paid.
- Option : C
- Explanation : The change in yield spread and hence the price of the bond due to changes in credit rating can be described as credit migration risk.
- Option : B
- Explanation : When the security has to be sold below its market value, the risk is called market liquidity risk.
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