CFA Practice Question

There are 266 practice questions for this study session.

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?

A. -4.2%
B. 2.1%
C. 4.2%
Correct Answer: B

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

User Contributed Comments 2

User Comment
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.
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