Convexity Is a Desirable Feature of Bonds Because

question 42

Multiple Choice

Convexity is a desirable feature of bonds because.

• A) As interest rates decline, the price of a low convexity bond decreases at a decreasing rate.
• B) As interest rates decline, the price of a high convexity bond decreases at an increasing rate.
• C) As interest rates decline, the price of a low convexity bond increases at a decreasing rate.
• D) As interest rates decline, the price of a high convexity bond increases at an increasing rate.
• E) As interest rates decline, the price of a high convexity bond decreases at a decreasing rate.

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Definitions:

Loner

An individual who prefers solitude and does not seek out social interactions frequently.

Displace

To move or transfer someone or something from one place to another, often referring to the emotional process of redirecting feelings from the original source towards a substitute target.

Boundaries

Limits that individuals set in order to create reasonable, safe, and permissible ways for other people to behave towards them.

Information

Data, facts, or details obtained through study, research, instructions, or communication.