- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 12. Yield-Based Bond Convexity and Portfolio Properties
- Subject 2. Bond Portfolio Duration and Convexity
CFA Practice Question
The duration of a fixed-income portfolio is best interpreted as the ______.
B. percentage change in the portfolio's value if interest rates change by 100 basis points
C. weighted average number of years to receive the present value of the portfolio's cash flows
A. first derivative of the price function for the bonds in the portfolio
B. percentage change in the portfolio's value if interest rates change by 100 basis points
C. weighted average number of years to receive the present value of the portfolio's cash flows
Correct Answer: B
Users of this interest rate risk measure are interested in what it tells them about how sensitive a bond or portfolio's price is to change in interest rates.
User Contributed Comments 3
| User | Comment |
|---|---|
| shamflora1 | why not C? |
| khalifa92 | i guess because it didnt mention macaulay |
| khalifa92 | plus it says present value |