Which of the Following Statements Are Incorrect

question 15

Multiple Choice

Which of the following statements are incorrect?

• A) Convexity is a desirable effect to a portfolio manager because it is easy to measure and price.
• B) All fixed-income assets exhibit convexity in their price-yield relationships.
• C) The greater is convexity, the more insurance a portfolio manager has against interest rate increases and the greater potential gain from rate decreases.
• D) The fact that the capital gain effect for rate decreases is greater than the capital loss effect for rate increases is caused by convexity in the yield-price relationship.

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Definitions:

Multiple Goals

The presence of more than one objective that an individual or organization aims to achieve.

Tenuous

Describes something that is very weak, slight, or uncertain; having little substance or significance.

Threatened

Feeling endangered or at risk, either physically, emotionally, or psychologically, often leading to defensive or protective actions.

Actual Noise

This refers to real, tangible disturbances in the environment that can interfere with the transmission and reception of a message.