### CFA Practice Question

There are 764 practice questions for this topic.

### CFA Practice Question

Consider the following portfolios comprised of 2-year, 5-year and 10-year zero-coupon bonds. D(n) is the key rate duration for the n-year part of the yield curve.

If the 2-year key rate shifts up 10 basis points and the 10-year rate shifts down 10 basis points, the value of the portfolio will change by ______.

Change in portfolio's value due to 2-year key rate change: 0.5 x (-10/100) = -0.05%.

Change in portfolio's value due to 10-year key rate change: 2.5 x (10/100) = 0.25%.

The total change in portfolio value is an increase of 0.2%.

### User Contributed Comments3

User Comment
Teeto D(2) is 5, how comes its 0.5x(-10/100) ?
D(10) is not present in the table.
If D(3) is used instead of (D10) (why?) then total value considering the first line does not change.

Chances are I got the question wrong.
sarasyed5 see the values in the bottom most row @teeto
davidt87 Teeto D(1) corresponds to the 2-year, D(2) to the 5-yr... etc.