CFA Practice Question

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CFA Practice Question

A bond has a modified duration of five and a convexity of 32. If its yield-to-maturity goes down by 25 bps, the bond price will go up by 1.26%. This is likely caused by ______.

A. a change in government benchmark yield
B. a change in the spread
C. either, or both
Correct Answer: C

The source of the yield-to-maturity change cannot be identified without further information.

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