CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

The table below summarizes the yields and corresponding prices for a hypothetical 15-year option-free bond that is initially priced to yield 7% ______.

Yield(%) | Price($)
6.90 | 100.9254
7.00 | 100.0000
7.10 | 99.0861

Using a 10 basis point rate shock, the duration for this bond is closest to:
A. 5.8 years.
B. 6.7 years.
C. 9.2 years.
Explanation: Effective duration = (100.9254 - 99.0861)/[2 x 100 x 0.001] = 9.2 years.

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