Because of Convexity of the Price/yield Curve of Fixed-Interest Securities,when

question 57

Multiple Choice

Because of convexity of the price/yield curve of fixed-interest securities,when interest rates _______,duration will _______ the change in price.

• A) fall; overestimate
• B) fall; underestimate
• C) rise; underestimate
• D) rise; not affect

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Definitions:

Critical Value

A threshold in a statistical test that delineates the boundary for rejecting or not rejecting the null hypothesis.

Null Hypothesis

In statistical testing, the default hypothesis stating that there is no significant difference or effect.

Obtained Value

The specific result or measurement derived from experimental or observational data, essential for evaluating hypotheses or models.

Dependent-Samples T Test

A statistical procedure used to compare the means from two related samples or groups to see if there are significant differences between them.