Question: a) Comparing two bonds with equal durations of 5 years, the percentage drop in the price of the bond with the higher convexity will be

a) Comparing two bonds with equal durations of 5 years, the percentage drop in the price of the bond with the higher convexity will be higher than the percentage drop in the price of the bond with the lower convexity, when interest rates increase

True/False

b) The higher the dividends paid on a share of stock over the next 3 months, the lower is the price of a forward contract on the share of stock with a delivery date in 3 months.

True/False

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