- CFA Exams
- CFA Level I Exam
- Study Session 15. Fixed Income (2)
- Reading 46. Understanding Fixed-Income Risk and Return
- Subject 5. Money Duration of a Bond and the Price Value of a Basis Point

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**CFA Practice Question**

An analyst determined that if interest rates increase 120 basis points the price of a bond would be $89.70, but if interest rates decrease 120 basis points the price of that bond would be $99.30. If the initial price of the bond is $95.40, the approximate percentage price change for a 100 basis point change in yield is closest
to:

A. 2.5%

B. 4.2%

C. 8.4%

**Explanation:**(99.3 - 89.7)/(2 x 95.4 x 0.012) = 4.2%

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**User Contributed Comments**
2

User |
Comment |
---|---|

ashish100 |
wtf.. just f'king say duration.. |

ashish100 |
jk |