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Basic Question 14 of 24
When interest rates are high relative to a bond's coupon, the effective duration of a callable bond should be ______ that of an otherwise identical straight bond.
B. similar to
C. lower than
A. higher than
B. similar to
C. lower than
User Contributed Comments 1
| User | Comment |
|---|---|
| khalifa92 | tricky question to end this LOS, stay awake in the exam. |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
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.