THE OPTION-FREE BONDS OF ARGUS CORPORATION HAVE A DURATION OF EIGH...

93. - MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM AFTERNOON VERSIONB QUESTIONS 2014
MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM AFTERNOON VERSIONB QUESTIONS 2014

93. The option-free bonds of Argus Corporation have a duration of eight years. When interest rates rise

by 100 bps, the bond's price declines by 7.9%. When interest rates fall by 100 bps, however, the

price rises by 8.2%. The asymmetrical price change is most likely caused by the:

A. maturity effect.

B. coupon effect.

C. convexity effect.