- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 3. Fixed-Income Issuance and Trading
- Subject 2. Fixed-Income Indexes
CFA Practice Question
Which is the characteristics of a broad bond index?
I. Easy to fully replicate
II. Frequent rebalancing
III. Large number of constituents.
Correct Answer: II and III
II: Bond indexes are usually rebalanced each month.
III: Some bond indexse have over 10,000 constituents.
User Contributed Comments 6
| User | Comment |
|---|---|
| loisliu88 | can anyone explain it for me. thanks |
| Patrick15 | the discounted payback rate will decrease the value of the returns, the payback period maintains the present value without discounting, so each payment is worth relatively more |
| jonan203 | if a $1,000 investment pays $250 every year for four years, if you discount each $250 payment by x% discount rate, you wouldn't have your $1,000 investment back in the fourth year no matter what discount rate you used. the larger the discount rate, the larger the payback period becomes |
| Shaan23 | DOes it matter if its Conventional or Non conventional? Isnt it the same for both? |
| jabiller | I believe conventional means always positive cashflow and non means there would be negative cashflows or returns. |
| MathLoser | Time value of money, guys. |