# Dollar Duration (not sum vs weighted avg)...CFAI vs Schweser

See CFAI Book, SS 8, page 340 example #6 Question: Why are they using “.01 / 3” in the calculation? The formula at the top of the page clearly states Dollar duration = Duration x Portfolio Value x .01 Now see Schweser Book 3, page 27 example…if you use the same logic as CFAI, the portfolio duration should be calculated using “.01/4”. I know CFAI posted their errata regarding Dollar Duartion but its in reference to the sum vs weighted avg issue, not the calculation I point out above. Am I missing something? What am I doing wrong?

tenbagger Wrote: ------------------------------------------------------- > See CFAI Book, SS 8, page 340 example #6 > > Question: Why are they using “.01 / 3” in the > calculation? The formula at the top of the page > clearly states Dollar duration = Duration x > Portfolio Value x .01 I think you said you checked the errata? It should NOT be divided by 3. > Now see Schweser Book 3, page 27 example…if you > use the same logic as CFAI, the portfolio duration > should be calculated using “.01/4”. No. No division (averaging) required. > I know CFAI posted their errata regarding Dollar > Duartion but its in reference to the sum vs > weighted avg issue, not the calculation I point > out above. Am I missing something? What am I > doing wrong?

Part B of the question is also wrong. they are still using the avg duration for the old an current portfolio. I think they should simply use the dollar duration. probably they failed to include it in errata.