- CFA Exams
- CFA Level I Exam
- Study Session 12. Fixed Income (1)
- Reading 32. The Term Structure and Interest Rate Dynamics
- Subject 7. Yield Curve Factor Models

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**CFA Practice Question**

An analyst observes that the daily standard deviation of yields has been 2.8% for a 5-year corporate bond. If there were 250 trading days in a year, what would be this bond yield's equivalent annual standard deviation?

A. 24.6%

B. 36.9%

C. 44.3%

**Explanation:**σ

_{annual}= σ

_{dialy}n

^{1/2}= 2.8% x 250

^{1/2}= 44.3%.

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