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Basic Question 11 of 24
When a bond has "negative convexity," it means that for a large change in interest rates ______
B. the amount of price appreciation is greater than the amount of price decline.
C. the amount of price appreciation or decline is unaffected by the rate change.
A. the amount of price appreciation is less than the amount of price decline.
B. the amount of price appreciation is greater than the amount of price decline.
C. the amount of price appreciation or decline is unaffected by the rate change.
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I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
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® 2025 Level I Curriculum, Volume 4, Module 13.