Question: What is negative convexity
What is negative convexity?
Answer to relevant QuestionsDoes a callable bond exhibit negative or positive convexity? Explain how, given the cash flow on the simulated interest-rate paths, the theoretical value of a RMBS is determined. Explain how the number of interest-rate paths used in the Monte Carlo simulation methodology is determined. What is vector analysis? Why would you expect that a distressed convertible would have a delta of zero?
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