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Basic Question 12 of 24
In general, an embedded option, whether it's a call option or put option, ______ the effective duration of a bond.
B. increases
C. It depends if it's a call or put option.
A. reduces
B. increases
C. It depends if it's a call or put option.
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I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
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® 2024 Level I Curriculum, Volume 4, Module 13.