CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

The duration of a fixed-income portfolio is best interpreted as the ______.

A. first derivative of the price function for the bonds in the portfolio
B. percentage change in the portfolio's value if interest rates change by 100 basis points
C. weighted average number of years to receive the present value of the portfolio's cash flows
Correct Answer: B

Users of this interest rate risk measure are interested in what it tells them about how sensitive a bond or portfolio's price is to change in interest rates.

User Contributed Comments 3

User Comment
shamflora1 why not C?
khalifa92 i guess because it didnt mention macaulay
khalifa92 plus it says present value
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