A High Convexity Value on a Bond Suggests

question 65

Multiple Choice

A high convexity value on a bond suggests

• A) the non-existence of reinvestment risk.
• B) a higher price increase when interest rates fall.
• C) a lower price decrease when interest rates fall.
• D) the duration is equal to maturity.
• E) price changes are identical for both increase and decrease in interest rates.

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Definitions:

Overall Impression

The cumulative perception or judgment formed about something or someone based on various individual attributes, experiences, or interactions.

Fundamental Attribution Error

The tendency to over-emphasize personality traits and underestimate situational factors when explaining another's behavior.

Internal Factors

Elements within an organization that can influence its performance, including its culture, policies, employee skills, and management capabilities.

External Factors

Elements outside of an organization that can affect its performance and strategies, such as market trends, regulations, and economic conditions.