Because of Convexity, When Interest Rates Change, the Actual Bond

question 47

Multiple Choice

Because of convexity, when interest rates change, the actual bond price will ________ the bond price predicted by duration.

• A) always be higher than
• B) sometimes be higher than
• C) always be lower than
• D) sometimes be lower than

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Definitions:

External Considerations

Factors outside an organization that can impact its operation and performance, such as market trends, competition, laws, and customer preferences.

Threats

Potential or actual negative forces or obstacles outside or inside an organization that could cause harm or impede progress.

BCG Matrix

A strategic planning tool that categorizes a company's business units or products into four quadrants based on their market share and market growth rate, to help in decision-making.

Categories

Classified groups or divisions within a larger system, often used to organize information or items.