Convexity Is a Measure of How Much a Bond's Price-Yield

question 48

True/False

Convexity is a measure of how much a bond's price-yield curve deviates from the linear approximation of that curve.

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Definitions:

Dividend Income

Income received from owning shares in a company that pays dividends to its shareholders.

Shares

A unit of ownership in a company or financial asset that represents a proportion of the corporation's capital.

T-Bills

Short-term government securities with maturities of less than a year, sold at a discount from their face value.

Probability

A quantitative measure of the likelihood of a certain event or outcome, expressed as a number between 0 and 1.