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