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Basic Question 8 of 17
Modified convexity is different from effective convexity because ______
B. the yield changes produce cash flow changes in modified convexity but not in effective convexity
C. effective convexity assumes that cash flows change as yields changes but modified convexity does not
D. although calculated differently, the two will always have the same convexity
A. the cash flows of modified convexity are always changing but this is not true for effective convexity
B. the yield changes produce cash flow changes in modified convexity but not in effective convexity
C. effective convexity assumes that cash flows change as yields changes but modified convexity does not
D. although calculated differently, the two will always have the same convexity
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Learning Outcome Statements
calculate and interpret convexity and describe the convexity adjustment
calculate the percentage price change of a bond for a specified change in yield, given the bond's duration and convexity
CFA® 2024 Level I Curriculum, Volume 4, Module 12.