CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

A portfolio manager uses her valuation model to estimate the value of a bond as 125.482. Using the same model, she estimates that the value would increase to 127.723 if interest rates fell 30 bps and would decrease to 122.164 if interest rates rose 30 bps. Using these estimates, the effective duration of the bond is closest to ______.
A. 5.22
B. 7.38
C. 6.14
Explanation: (127.723 - 122.164)/(2 x 125.482 x 0.003) = 7.38

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