Hey All,
Looking for some clarification here. I answered C to this problem due to the fact that there is no explicit comment in the text saying that the duration of a bond is ~75% of its maturity. Upon consulting the CFAI text (Vol 5 483-487), I noted that in the blue box the say to use the 75% rule as an assumption only (p. 486 specically mentions using 75% for convience sake) but that this is simply an assumption for the particular problem outlined, not a hard fast rule.
It seems to me that requiring the canidate to make an assumption that is not explicitly stated is a bit unfair. Does anyone know if in other practice problems they have seen the correct answer to the question require the 75% assumption? Should I be using the 75% as a hard fast rule from now on?
Thanks for any help.