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Basic Question 3 of 14
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. |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
calculate and interpret effective duration of a callable or putable bond;
compare effective durations of callable, putable, and straight bonds;
describe the use of one-sided durations and key rate durations to evaluate the interest rate sensitivity of bonds with embedded options;
CFA® 2025 Level II Curriculum, Volume 4, Module 28.