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NEW QUESTION: 1
A bond with a 5% coupon trades at 95. An increase in interest rates by 10 bps causes its price to decline to
$94.50. A decrease in interest rates by 10 bps causes its price to increase to $95.60. Estimate the convexity of the bond.
A. 1.053
B. 0
C. 1
D. 5.79
Answer: B
Explanation:
Explanation
Convexity is nothing but the second derivative with respect to price - or in other words, it is the first derivative of the modified duration. If we could determine two data points for modified duration, we can determine convexity too.
The modified duration is the percentage change in bond price from a 1% change in yield.
In this case, for the up move, the modified duration can be calculated as follows:
Change in price for 10 bps change in yield = $0.60/$95 =0.006316
Change in price for a 1% change in yield = 0.006316 * 10 = 0.06316
Therefore modified duration = 0.06316 * 100 = 6.316
For the down move in price, the modified duration is similarly $0.50/$95 * 10 * 100 = 5.263.
The convexity therefore is the difference between these two modified durations divided by the change in interest rates - note that these two points are separated by 10 basis points and not 20. Therefore convexity is (6.32 - 5.26)/0.1% = 1052.6.
[Note on how duration was calculated: In this case, we can estimate the duration of the bond as follows: we know that a 10 bps increase in rates causes the price to move to $94.50, and a 10 bps decrease causes the price to increase to $95.60. Thus, over the range of the 20 bps, the average change in price per basis point is ($95.60
- $94.50)/20 bps = $1.10/20 = $0.055/basis point, or $0.055* 100 = $5.5 for 100 basis points (ie 1%). We know that modified duration is equivalent to the percentage change in the bond price as a result of a 1% change in interest rates. A 1% change in the interest rates leading to a $5.5 change in a bond priced at $95 equates to $5.5/$95 = 5.79%, in other words the modified duration is roughly equal to 5.79 years.
In fact if we know the price of a bond at any two different interest rates, we can make an estimate of modified duration. Modified duration is just the first derivative with respect to price, and given two prices and the associated yields, we can easily calculate modified duration to be the ratio of the change in price to the change in interest rates. In this question, we are given both an up move and a down move. Using this estimation, only one data point (ie, either the up price or the down price) in addition to the starting point ($95) would have been enough to come to a rough estimate of modified duration. You will notice that the modified duration would be slightly different if we were to use the high point and the starting point (ie $95.60 and $95), and the starting point and the lower point ($95 and $94.50). The difference is due to convexity. The decrease in price is lower than the increase in price - and this is due to the convexity of the bond.]
NEW QUESTION: 2
Your company has offices in New York, Paris, and Montreal. An Active Directory site exists for each office.
You have an Exchange Server 2013 organization that contains two servers in each site. One server in each site has the Mailbox server role installed and the other server in each site has the Client Access server role installed.
You need to ensure that all of the outbound email from each site is routed through the Client Access server in that site.
Which should you do?
A. Disable the Microsoft Exchange Transport service on each Mailbox server.
B. Remove the Mailbox servers from the list of source servers on each Send connector.
C. Run the Set-TransportConfig cmdlet and specify the -InternatSMTPServers:$nult parameter.
D. Run the Set-SendConnector cmdlet and specify the -FrontendProxyEnabted.True parameter.
Answer: D
Explanation:
Explanation/Reference:
Proxying Outbound Email Through Exchange 2013 Client Access Servers
NEW QUESTION: 3
Mathew ascended three flights of stairs--passed half-way down a long arched gallery--and knocked at
another old-fashioned oak door. This time the signal was answered. A low, clear, sweet voice, inside the
room, inquired who was waiting without? In a few hasty words Mathew told his errand. Before he had
done speaking the door was quietly and quickly opened, and Sarah Leeson confronted him on the
threshold, with her candle in her hand.
Not tall, not handsome, not in her first youth--shy and irresolute in manner--simple in dress to the utmost
limits of plainness--the lady's-maid, in spite of all these disadvantages, was a woman whom it was
impossible to look at without a feeling of curiosity, if not of interest. Few men, at first sight of her, could
have resisted the desire to find out who she was; few would have been satisfied with receiving for answer,
She is Mrs. Treverton's maid; few would have refrained from the attempt to extract some secret
information for themselves from her face and manner; and none, not even the most patient and practiced
of observers, could have succeeded in discovering more than that she must have passed through the
ordeal of some great suffering at some former period of her life. Much in her manner, and more in her face,
said plainly and sadly: I am the wreck of something that you might once have liked to see; a wreck that
can never be repaired--that must drift on through life unnoticed, unguided, unpitied--drift till the fatal shore
is touched, and the waves of Time have swallowed up these broken relics of me forever.
This was the story that was told in Sarah Leeson's face--this, and no more. No two men interpreting that
story for themselves, would probably have agreed on the nature of the suffering which this woman had
undergone. It was hard to say, at the outset, whether the past pain that had set its ineffaceable mark on
her had been pain of the body or pain of the mind. But whatever the nature of the affliction she had
suffered, the traces it had left were deeply and strikingly visible in every part of her face.
Her cheeks had lost their roundness and their natural color; her lips, singularly flexible in movement and
delicate in form, had faded to an unhealthy paleness; her eyes, large and black and overshadowed by
unusually thick lashes, had contracted an anxious startled look, which never left them and which piteously
expressed the painful acuteness of her sensibility, the inherent timidity of her disposition. So far, the
marks which sorrow or sickness had set on her were the marks common to most victims of mental or
physical suffering. The one extraordinary personal deterioration which she had undergone consisted in
the unnatural change that had passed over the color of her hair.
It was as thick and soft, it grew as gracefully, as the hair of a young girl; but it was as gray as the hair of an
old woman. It seemed to contradict, in the most startling manner, every personal assertion of youth that
still existed in her face. With all its haggardness and paleness, no one could have looked at it and
supposed for a moment that it was the face of an elderly woman. Wan as they might be, there was not a
wrinkle in her cheeks. Her eyes, viewed apart from their prevailing expression of uneasiness and timidity,
still preserved that bright, clear moisture which is never seen in the eyes of the old. The skin about her
temples was as delicately smooth as the skin of a child. These and other physical signs which never
mislead, showed that she was still, as to years, in the very prime of her life.
Sickly and sorrow-stricken as she was, she looked, from the eyes downward, a woman who had barely
reached thirty years of age. From the eyes upward, the effect of her abundant gray hair, seen in
connection with her face, was not simply incongruous--it was absolutely startling; so startling as to make it
no paradox to say that she would have looked most natural, most like herself if her hair had been dyed. In
her case, Art would have seemed to be the truth, because Nature looked like falsehood.
What shock had stricken her hair, in the very maturity of its luxuriance, with the hue of an unnatural old
age? Was it a serious illness, or a dreadful grief that had turned her gray in the prime of her womanhood?
That question had often been agitated among her fellow-servants, who were all struck by the peculiarities
of her personal appearance, and rendered a little suspicious of her, as well, by an inveterate habit that
she had of talking to herself. Inquire as they might, however, their curiosity was always baffled. Nothing
more could be discovered than that Sarah Leeson was, in the common phrase, touchy on the subject of
her gray hair and her habit of talking to herself, and that Sarah Leeson's mistress had long since forbidden
every one, from her husband downward, to ruffle her maid's tranquility by inquisitive questions.
In context, the word "wan" in the passage most nearly means
A. round.
B. shapely.
C. pale.
D. pretty.
E. pink.
Answer: C
Explanation:
Explanation/Reference:
Given all of the unusual features of Sarah's face, only Choice E is congruent with what we know.