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

---

Definitions:

Information Deficiencies

Situations where there is a lack of necessary, relevant, or accurate information for decision-making or problem-solving.

Certain Environment

An environment that offers complete information on possible action alternatives and their consequences.

Probabilities

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Crisis Management

The process by which an organization deals with a disruptive and unexpected event that threatens to harm the organization or its stakeholders.