Given the Function , Find the Average Rate of Change

question 43

Multiple Choice

Given the function , find the average rate of change between and .

• A) 0.05
• B) 21
• C) 7
• D) 147
• E) -3

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Definitions:

Convexity

The curvature of the price–yield relationship of a bond.

Yield

The annual percentage yield received from an investment, including interest or dividends, relative to the cost of that investment.

Rate Anticipation Swap

A switch made between bonds of different durations in response to forecasts of interest rates.

Portfolio Duration

A measure of the sensitivity of a portfolio's value to changes in interest rates, often used for managing the interest rate risk.