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CSI IFC Exam - Topic 1 Question 9 Discussion
Actual exam question for
CSI's
IFC exam
Question #: 9
Topic #: 1
[All IFC Questions]
Topic #: 1
What may be used to determine which of two bond portfolios is more sensitive to interest rate changes?
Suggested Answer:
D
The sensitivity of a bond or bond portfolio to interest rate changes is measured by duration, also called time-weighted maturity.
Duration represents the approximate % change in bond price for a 1% change in interest rates.
Higher duration = greater sensitivity to interest rate movements.
Therefore, the correct measure is Time-weighted maturity (Duration).
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