Question: Convexity implies that duration predictions Answer a. underestimate the % decrease in bond price when the yield rises b. underestimate the % increase in bond

Convexity implies that duration predictions

Answer

a.

underestimate the % decrease in bond price when the yield rises

b.

underestimate the % increase in bond price when the yield falls

c.

overestimates the % increase in bond price when the yield falls

d.

overestimates the % decrease in bond price when the yield rises

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