Question: Callable bonds exhibit negative convexity. This is because their effective duration ______ as interest rates _______. A. decreases; decrease B. decreases; change C. increases; decrease

Callable bonds exhibit negative convexity. This is because their effective duration ______ as interest rates _______.

  • A. decreases; decrease

  • B. decreases; change

  • C. increases; decrease

  • D. increases; change

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