- CFA Exams
- CFA Level I Exam
- Study Session 15. Fixed Income (2)
- Reading 46. Understanding Fixed-Income Risk and Return
- Subject 5. Money Duration of a Bond and the Price Value of a Basis Point

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**CFA Practice Question**

If a bond is trading at 96.829 with a yield to maturity of 4.53 percent and duration equal to 5.38, its Price Value of a Basis Point (PVBP) is closest to:

A. 0.0463

B. 0.0482

C. 0.0521

**Explanation:**The duration multiplied by one basis point (0.0001) multiplied by 100% is the percentage change in value of the bond for a one basis point change in interest rates. PVBP is the price multiplied by the percentage change in value for a one basis point change in interest rates, or 5.38 x 0.0001 x 100% = 0.0538% multiplied by 96.829 = 0.0521.

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