- CFA Exams
- CFA Level I Exam
- Study Session 15. Fixed Income (2)
- Reading 46. Understanding Fixed-Income Risk and Return
- Subject 3. Properties of Bond Duration

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**CFA Practice Question**

Bond A is a seven-year, 8% coupon bond. It has a modified duration of 4.2 and a current yield of 6.6%. If the yield were to suddenly decrease to 6.1%, approximately what will be the percentage price change for this bond?

B. 2.1%

C. 4.2%

A. -4.2%

B. 2.1%

C. 4.2%

Correct Answer: B

%ΔP = D(Δr) = (-4.2) x (-0.005) = 2.1%

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**User Contributed Comments**
2

User |
Comment |
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johntan1979 |
Anyone else tried to calculate the duration and didn't get 4.2? |

GBolt93 |
I got 5.2 assuming semi annual payments. Though there's not really any point in calculating it since it's given. |