a. calculate and interpret the sources of return from investing in a fixed-rate bond;

b. define, calculate, and interpret Macaulay, modified, and effective durations;

c. explain why effective duration is the most appropriate measure of interest rate risk for bonds with embedded options;

d. define key rate duration and describe the use of key rate durations in measuring the sensitivity of bonds to changes in the shape of the benchmark yield curve;

e. explain how a bond's maturity, coupon, and yield level affect its interest rate risk;

f. calculate the duration of a portfolio and explain the limitations of portfolio duration;

g. calculate and interpret the money duration of a bond and price value of a basis point (PVBP);

h. calculate and interpret approximate convexity and distinguish between approximate and effective convexity;

i. estimate the percentage price change of a bond for a specified change in yield, given the bond's approximate duration and convexity;

j. describe how the term structure of yield volatility affects the interest rate risk of a bond;

k. describe the relationships among a bond's holding period return, its duration, and the investment horizon;

l. explain how changes in credit spread and liquidity affect yield-to-maturity of a bond and how duration and convexity can be used to estimate the price effect of the changes.