2008 Schweser Practice Exam V1 Exam 2 Q17

Q17.4 Is it that the MD (modified duration) of the $10M fixed-rate bond issued by Anderson 5 years ago is - 4.0 (not + 4.0, because it pays fixed rate) ? or only in an I/R swap that the bonds will have negative MD when pays fixed-rate (receive floating rate) ? On the other hand, the notional principal is calculated as $10M x (4/3.5) = 11.43M in its solution. Is it that this uses the same equation for adjusting duration of FI portfolio (Please refer to CFAI text V5 P.485~488) ? It seems something different to me ! Q17.6 Answer A (statement 1) is said to be the correct answer. However, it stated : -------- so long-term returns can be poor" in statement 1, while it stated : -------offering the potential for high returns in its solution. Is it discrepant ? Anyone can clarify / explain ?

Sorry it shall be 2009 (not 2008) Schweser Practice Exam V1 Exam 2 Q17.

Any response ?