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Basic Question 5 of 24
The best duration measure for a mortgage-backed bond is ______.
B. Modified duration
C. Effective duration
A. Macaulay duration
B. Modified duration
C. Effective duration
User Contributed Comments 4
| User | Comment |
|---|---|
| HolzGe1 | Because of possible prepayments. |
| adidasler | or refinancing |
| ashish100 | nice thanks guys! |
| Kiniry | refinancing=prepayments |
I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt
Learning Outcome Statements
explain why effective duration and effective convexity are the most appropriate measures of interest rate risk for bonds with embedded options
calculate the percentage price change of a bond for a specified change in benchmark yield, given the bond's effective duration and convexity
CFA® 2025 Level I Curriculum, Volume 4, Module 13.