- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 46. Understanding Fixed-Income Risk and Return
- Subject 7. Interest Rate Risk and the Investment Horizon

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**CFA Practice Question**

The key assumption when calculating effective duration and effective convexity is ______

B. there is a parallel yield curve shift.

C. there is a term structure of yield curve.

A. the yield curve is sloping upwards.

B. there is a parallel yield curve shift.

C. there is a term structure of yield curve.

Correct Answer: B

The key assumption is that all yields-to-maturity rise or fall by the same amount across the curve.

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