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Basic Question 22 of 24
The convexity adjustment is ______ on a traditional (option-free) fixed-rate bond for either an increase or decrease in the yield.
B. always a negative amount
C. either a positive or a negative amount
A. always a positive amount
B. always a negative amount
C. either a positive or a negative amount
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I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
explain why effective duration and effective convexity are the most appropriate measures of interest rate risk for bonds with embedded options
calculate the percentage price change of a bond for a specified change in benchmark yield, given the bond's effective duration and convexity
CFA® 2024 Level I Curriculum, Volume 4, Module 13.