Avatto > CFA Level 1 > PRACTICE QUESTIONS > Fixed Income > Fixed Income Section 2

Fixed Income MCQ - Fixed Income Section 2

16 Which of the following is least likely to be a type of bond duration?

There is no bond duration known as spot duration.

17 Given that the Macaulay duration of an 8% annual payment bond with a 7% yield is 6.5, which of the following is most likely to be the modified duration?

ModDur = (MacDur) / (1 + r) = 6.5 / 1.07 = 6.07.

18 Owing to a yield change of 50 bps, the price of the bond increases and decreases to $102.86 and $101.31. Given that the current price of the bond is $102.00, which of the following is most likely to be the approximate modified duration?

19 Which of the following is least likely to be used for the calculation of effective duration?

Unlike the modified duration, effective duration is a curve duration statistic that measures interest rate risk in terms of a change in the benchmark yield curve. Thus, the change in the bond’s own yield to maturity is not used for calculation.

20 An investor wants to see how bond prices move with small changes in yield. The measure he will most likely use is:

Modified duration states the change in price of a bond as a result of change in yield for specific basis points/percentage. Macaulay duration states the weighted average time period until each payment due on a bond is expected to be paid off. Accelerated duration is an incorrect term.

Your Progress

0%

Start Practising!

You've answered 0 of 70 questions in this topic.

Practice Spotlight

Money Duration

Money duration converts percentage price sensitivity into a currency amount. It estimates the approximate change in a bond's value for a small change in yield.

Day 10 / 10

Global Spotlight

Build Your First Streak

Complete one short Fixed Income Section 2 session today, then return tomorrow. Consistency matters more than a long first session.

Day 2 / 10

Question Spotlight

Question:

Which of the following is least likely to be a component of credit risk?

A. Default probability.
B. Loss severity.
C. Price trajectory.

Correct answer: C

Explanation:

The two components of credit risk are default probability and loss severity.

Click to view the complete question details

Day 8 / 10 Open this question

Community Insight

Based on 389 saved attempts

Most Attempted TopicFixed Income Section 1
Most Challenging TopicFixed Income Section 1
Average Accuracy99%

Featured Question

(Based on recent community answers)

Q. #271740% Incorrect

Investor A is a long-term bond investor. Investor B is a short-term bond investor. If…

Try This Question →

This Week's Challenge

Complete 20 questions. Community average: 47.5 this week.

0 / 20 Start Challenge →

Why Practice with Avatto?

High Quality MCQsExam-focused questions with accurate answers

Detailed ExplanationsStep-by-step explanations to enhance learning

Latest Exam PatternBased on updated syllabus and pattern

Performance AnalyticsTrack performance and improve weak areas

100% Free PracticePractice unlimited questions for free

Forgot your password?

I agree with the Terms.