The Error from Using Duration to Estimate the New Price

question 122

True/False

The error from using duration to estimate the new price of a fixed-income security will be less as the amount of convexity increases.

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Definitions:

Behavioral Perspective

The behavioral perspective is a way of looking at psychological issues and disorders by focusing on observable behaviors and the ways in which environment influences those behaviors.

Learning

A relatively permanent change in an organism’s behavior due to experience.

Observable Responses

are reactions or behaviors that can be seen and measured directly, often used in behavioral studies to understand actions and outcomes.

Cognitive

Pertaining to the mental processes involved in gaining knowledge and comprehension, including thinking, knowing, remembering, judging, and problem-solving.