- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 6. Fixed-Income Bond Valuation: Prices and Yields
- Subject 3. Relationships between Bond Price and Bond Characteristics
CFA Practice Question
Bond prices are more sensitive to a(an) ______ in market yields to maturity than to a(an) ______ in market yields to maturity.
B. increase; decrease
C. no change; increase
A. decrease; increase
B. increase; decrease
C. no change; increase
Correct Answer: A
User Contributed Comments 6
| User | Comment |
|---|---|
| danlan | Duration becomes larger when YTM decreases. |
| toly | If YTM decrease bond price increases and if YTM increase bond price decrease. Remember for a large percentage change in yield, a bond will appreciatie more than it would depreciate(Convexity- draw it out see how the much more price changes as yield drops) |
| erinelize | They try to throw you off by only offering "an" as a choice for the first blank. |
| johntan1979 | Easy if you can picture the graph in your mind. |
| Inaganti6 | anything is easy for you. youre johntan1979 on analystnotes. Legend of all legends! |
| khalifa92 | percentage change in price increase is greater than the percentage change in price decrease ( convexity). |