American Bankers Association Exam CTFA Topic 1 Question 69 Discussion

Actual exam question for American Bankers Association's CTFA exam

Question #: 69
Topic #: 1

[All CTFA Questions]

The sensitivity of coupon price to change in its yield:

AIs directly related to the bond's yield

BIs inversely related to the bond's yield to maturity

CIs greater for increases in yield to maturity than it is for decreases in yield to maturity

DIs constant regardless of whether the yield to maturity increases or decreases

Show Suggested Answer

Suggested Answer: B

by Carin at Jul 03, 2024, 11:00 PM

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Alona

Wait, we're talking about coupons? I thought this was a test on how to maximize my snack budget. Where's the multiple-choice question on whether Doritos or Cheetos are the superior chip?

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Shawna

5 days ago

D can't be right, can it? The sensitivity has to depend on whether the yield is going up or down. Unless the bond market is just a giant game of Calvinball, that is.

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C seems like the correct answer to me. The sensitivity is greater for increases in yield to maturity than for decreases. It's like the bond market is more sensitive to bad news than good news. Go figure!

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Almeta

12 days ago

I think the sensitivity is greater for increases in yield to maturity than for decreases.

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Glenn

14 days ago

Hmm, I'm not sure about this one. I'll have to think it through a bit more. Maybe I should have studied bond pricing formulas a little harder.

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Golda

15 days ago

I think the answer is B. The sensitivity of the coupon price is inversely related to the bond's yield to maturity. This makes sense because as the yield increases, the price of the bond decreases.

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Salome

16 days ago

I disagree, I believe it is inversely related to the bond's yield to maturity.

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Yuonne

20 days ago

I think the sensitivity of coupon price is directly related to the bond's yield.

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American Bankers Association Exam CTFA Topic 1 Question 69 Discussion

Contribute your Thoughts:

Alona

Shawna

Kimbery

Almeta

Glenn

Golda

Salome

Yuonne