- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 13. Curve-Based and Empirical Fixed-Income Risk Measures
- Subject 1. Curve-Based Interest Rate Risk Measures
CFA Practice Question
When interest rates are high relative to a bond's coupon, the effective duration of a callable bond should be ______ that of an otherwise identical straight bond.
B. similar to
C. lower than
A. higher than
B. similar to
C. lower than
Correct Answer: B
The call option is out of money in this case. It has very little impact on effective duration.
User Contributed Comments 1
| User | Comment |
|---|---|
| khalifa92 | tricky question to end this LOS, stay awake in the exam. |