- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 46. Understanding Fixed-Income Risk and Return
- Subject 6. Bond Convexity

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**CFA Practice Question**

A 10-year, 8% coupon bond has a duration of 4.1 and a convexity measure of 168. If the yield on this bond was to decrease by 55 basis points, what would be the estimate of the bond's percentage price change?

A. 2.25%

B. 2.51%

C. 2.76%

**Explanation:**%ΔP = D(Δr) + C (Δr)

^{2}= -4.1 * -0.0055 + 168/2 * (-0.0055)

^{2}= 2.51%

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