- CFA Exams
- CFA Level I Exam
- Study Session 15. Fixed Income (2)
- Reading 46. Understanding Fixed-Income Risk and Return
- Subject 2. Macaulay, Modified and Effective Durations

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**CFA Practice Question**

Modified duration is calculated based on measuring the interest rate sensitivity of price with ______.

B. constant expected cash flows discounted at new interest rates or yields

C. price volatility measured by the varying interest rates

D. V

A. varying cash flows and constant interest rate shocks

B. constant expected cash flows discounted at new interest rates or yields

C. price volatility measured by the varying interest rates

D. V

_{-}and V_{+}based on the original yieldCorrect Answer: B

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**User Contributed Comments**
1

User |
Comment |
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bundy |
Assume that a bonds expected cash flows do not change when its yield changes. |