CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

One approach to calculate bond portfolio duration is to calculate the weighted average of the individual bond durations. The major limitation of this approach is ______
A. the amount and timing of future coupon and principal payments are uncertain if the portfolio contains callable or putable bonds.
B. the yield curve is assumed to take a parallel shift.
C. the approach is not easy to apply in practice.
Explanation: This approach assumes that all rates change by the same amount in the same direction. This is not usually the case.

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