Convexity Implies That Duration Predictions _______

question 51

Multiple Choice

Convexity implies that duration predictions _______.
I.underestimate the % increase in bond price when the yield falls
II.underestimate the % decrease in bond price when the yield rises
III.overestimates the % increase in bond price when the yield falls
IV.overestimates the % decrease in bond price when the yield rises

• A) I and III only
• B) II and IV only
• C) I and IV only
• D) II and III only

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Definitions:

Vocabulary

The group of words recognized and employed by an individual in a certain language.

Age

the length of time that a person or object has existed or the period during which an organism has lived.

Prospective Memory

Refers to the ability to remember to perform actions in the future, such as remembering to take medication at a certain time.

Tip-Of-The-Tongue

A cognitive phenomenon where a person cannot fully retrieve a word but has a partial recall or feels that retrieval is imminent.