- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 11. Yield-Based Bond Duration Measures and Properties
- Subject 3. Properties of Bond Duration
CFA Practice Question
A longer time-to-maturity might lead to a lower duration for a bond priced at ______.
B. par value
C. a discount
A. a premium
B. par value
C. a discount
Correct Answer: C
This only happens if the coupon rate is low and time-to-maturity is long.
User Contributed Comments 4
| User | Comment |
|---|---|
| ashish100 | So glad I get this now. Here's my thought process. Time UP -----> Duration UP (positive relation) Duration UP -----> YTM DOWN (inverse relation) Lower YTM means its a discount bond. |
| ashish100 | shit lol totally disregard what i said above. misread the question completely |
| ashish100 | also i know. lower YTM than coupon is premium bond. wish there was a delete button here. |
| khalifa92 | the exception is that the effect of low coupon payments outweighs the effect of long time maturity for discount bonds |