Question: Can someone help me understand which selection is the correct answer and why? 7. If bond A and B have the same duration, but bond
Can someone help me understand which selection is the correct answer and why?
7. If bond A and B have the same duration, but bond B has less convexity than A, then which of the following statement(s) is correct? (a) the price of bond A will fall more than B if the level of interest rates increases. (b) the price of bond A will fall less than B if the level of interest rates increases. (c) the price of bond A will rise more than B if the level of interest rates decreases. (d) the price of bond A will rise less than B if the level of interest rates decreases. 3 (e) the price of bond A will change in the same amount as B for a given change in the level of interest rates because they have the same duration
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