- CFA Exams
- CFA Exam: Level I 2021
- Study Session 15. Fixed Income (2)
- Reading 46. Understanding Fixed-Income Risk and Return
- Subject 3. Properties of Bond Duration
CFA Practice Question
In general, an embedded option, whether it's a call option or put option, ______ the effective duration of a bond.
B. increases
C. It depends if it's a call or put option.
A. reduces
B. increases
C. It depends if it's a call or put option.
Correct Answer: A
An option makes it possible to shorten the life of a bond.
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