CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

A longer time-to-maturity might lead to a lower duration for a bond priced at ______.

A. a premium
B. par value
C. a discount
Correct Answer: C

This only happens if the coupon rate is low and time-to-maturity is long.

User Contributed Comments 4

User Comment
ashish100 So glad I get this now. Here's my thought process.

Time UP -----> Duration UP (positive relation)
Duration UP -----> YTM DOWN (inverse relation)

Lower YTM means its a discount bond.
ashish100 shit lol

totally disregard what i said above. misread the question completely
ashish100 also i know. lower YTM than coupon is premium bond.

wish there was a delete button here.
khalifa92 the exception is that the effect of low coupon payments outweighs the effect of long time maturity for discount bonds
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