- 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 low, the effective duration of a ______ bond is ______ than that of an otherwise comparable ______ bond.
B. putable, higher than, non-putable
C. callable, lower than, non-callable
A. putable, lower than, non-putable
B. putable, higher than, non-putable
C. callable, lower than, non-callable
Correct Answer: C
A putable bond's effective duration is very similar to that of an otherwise comparable putable bond when interest rates are low.
User Contributed Comments 1
| User | Comment |
|---|---|
| khalifa92 | and lower if interest rates are high because the put option would be exercised. |