- 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
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: σannual = σdialyn1/2 = 2.8% x 2501/2 = 44.3%.
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