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Basic Question 5 of 12
If the yield on a 3-year Treasury increases by 5 basis points, then the yields on all other Treasuries also increase by 5 basis points.
B. This situation seldom happens.
C. This situation happens often.
A. This situation never happens.
B. This situation seldom happens.
C. This situation happens often.
User Contributed Comments 1
| User | Comment |
|---|---|
| ryanpetty | Yield curve shifts are rarely parallel. An investor that can correctly forecast a parallel shift in the yield curve can profit by buying and selling the securities most affected by the shift. In the real world, however, the yield curve does not move this way. The curve tends to steepen, or yield an increase in the long end of the curve compared to shorter issues. The curve can also flatten, with yield on the long end decreasing at a faster rate than at the short end of the curve. |
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Learning Outcome Statements
explain how a bond's exposure to each of the factors driving the yield curve can be measured and how these exposures can be used to manage yield curve risks;
explain the maturity structure of yield volatilities and their effect on price volatility.
CFA® 2025 Level II Curriculum, Volume 4, Module 26.