Fixed Income

12. Yield-Based Bond Convexity and Portfolio Properties practice questions

12. Yield-Based Bond Convexity and Portfolio Properties is part of CFA Level I Fixed Income. Fixed Income questions focus on bond cash flows, yield measures, duration, convexity, credit risk, securitization, and curve interpretation. Use this page to review the controlling ideas, then work through 7 questions with answer explanations and common traps.

Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.

Practice this topic

What to know

Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.

How to practice

Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.

Review signal

Missed questions should become scheduled reviews when the error comes from a concept gap, formula setup, or answer-choice trap.

Moderate

Fixed Income

12. Yield-Based Bond Convexity and Portfolio Properties

A bond has modified duration of 7.0 and convexity of 60. If its yield increases by 50 bps, the estimated percentage price change, including convexity, is closest to:

Very Difficult

Fixed Income

12. Yield-Based Bond Convexity and Portfolio Properties

A portfolio contains 60 million market value of bonds with duration 5.0 and 40 million market value of bonds with duration 8.0. The portfolio duration is closest to:

Easy

Fixed Income

12. Yield-Based Bond Convexity and Portfolio Properties

For an option-free bond, positive convexity means that for equal-size yield moves, the price gain when yields fall is:

Easy

Fixed Income

12. Yield-Based Bond Convexity and Portfolio Properties

A callable bond near the call price is most likely to exhibit:

Moderate

Fixed Income

12. Yield-Based Bond Convexity and Portfolio Properties

A bond has modified duration of 7.2 and convexity of 82. For a 40 bp increase in yield, the estimated percentage price change using duration and convexity is closest to:

Moderate

Fixed Income

12. Yield-Based Bond Convexity and Portfolio Properties

A portfolio has 40% in Bond A with duration 3.0 and 60% in Bond B with duration 7.0. The portfolio duration is closest to:

Very Difficult

Fixed Income

12. Yield-Based Bond Convexity and Portfolio Properties

A bond's current full price is 100.00. If yields decrease by 50 bps, price is 105.20; if yields increase by 50 bps, price is 95.40. Approximate convexity is closest to: