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Basic Question 4 of 6
A longer time-to-maturity might lead to a lower duration for a bond priced at ______.
B. par value
C. a discount
A. a premium
B. par value
C. a discount
User Contributed Comments 4
| User | Comment |
|---|---|
| ashish100 | So glad I get this now. Here's my thought process. Time UP -----> Duration UP (positive relation) Duration UP -----> YTM DOWN (inverse relation) Lower YTM means its a discount bond. |
| ashish100 | shit lol totally disregard what i said above. misread the question completely |
| ashish100 | also i know. lower YTM than coupon is premium bond. wish there was a delete button here. |
| khalifa92 | the exception is that the effect of low coupon payments outweighs the effect of long time maturity for discount bonds |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
explain how a bond's maturity, coupon, and yield level affect its interest rate risk
CFA® 2024 Level I Curriculum, Volume 4, Module 11.