CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

The relationship between modified duration and Macaulay duration is ______

A. the modified duration is the Macaulay duration divided by (1+ yield/k).
B. the Macaulay duration is the modified duration divided by (1+ yield/k).
C. that the modified duration is always greater than the Macaulay duration.
Correct Answer: A

User Contributed Comments 1

User Comment
Kennyk11 The modified duration will always be less than the Macaulay duration, except for the case when the yield is 0, in which case the Modified Duration will equal the Macaulay duration.

Ex. If r=0

Modified Duration = Macaulay Duration / (1+0) = Macaulay Duration
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