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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