Confirming again my understanding of the Breakeven calc

yld adv = duration x spread widening

Bond A has yield adv but bond B has longer duration.

If question just asks for the breakeven spread widening or from perspective of Bond B, use Bond B’s duration. If asked from Bond A perspective use Bond A’s duration. Do I have that right? This one always trips me up.

no. ALWAYS use the duration of the higher bond. Also make sure you are using the proper spread time period, the CFAI books always use quarterly spread advantage so just keep an eye for that if they give you annual yields, they may ask you to solve for quarterly.

*always use the highest duration of the two bonds… sorry wanted to clarify that.

in which case you would just divide by 4 right lincoln? since it is simple yield


Not always. It’s only the higher duration when they don’t specify which bond. There are questions where they tell you which bond to use.

True - it’s not always the longer duration bond - although that is the default way of doing it not specified

so if they ask for a spread disadvantage of a bond that has lower duration, we should divide the spread by the lower duration bond correct?