Would You Consider Convexity of a Fixed-Income Security to Be

question 4

Essay

Would you consider convexity of a fixed-income security to be desirable or undesirable for an FI? Explain your opinion.

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Definitions:

Mean

A statistical measure that calculates the average value of a set of numbers by dividing the sum of all values by the number of values.

Median

The middle value in a dataset when it is ordered from smallest to largest, or the mean of the two middle numbers if there is an even number of values.

Sample Variance

A measure that quantifies the degree to which sample points in a dataset differ from the sample mean.

Population Variance

A measure of the dispersion of individual values in a population around the mean of the population.