If You Expected Interest Rates to Fall, You Would Prefer

question 96

Multiple Choice

If you expected interest rates to fall, you would prefer to own bonds with

• A) long durations and high convexity.
• B) long durations and low convexity
• C) short durations and high convexity.
• D) short durations and high convexity
• E) None of these are correct.

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Definitions:

Profits

The financial gain realized when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Ethical Thinking

The process of considering and applying moral principles and values in decision-making.

Values

Fundamental beliefs or ideals that guide an individual's or organization's behavior and decision-making process.

Behaviors

Actions or reactions of an individual or group in response to external or internal stimuli.