- CFA Exams
- CFA Level I Exam
- Study Session 15. Fixed Income (2)
- Reading 46. Understanding Fixed-Income Risk and Return
- Subject 2. Macaulay, Modified and Effective Durations
CFA Practice Question
Which of the following most accurately measures interest rate sensitivity for bonds with embedded options?
A. Convexity
B. Effective duration
C. Macaulay duration
Explanation: Effective duration is essential to the measurement of the interest rate risk of a complex bond.
User Contributed Comments 1
| User | Comment |
|---|---|
| iceluke | page 242 --> effective duration is the appropriate measure for any bond with an embedded option |