- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 6. Fixed-Income Bond Valuation: Prices and Yields
- Subject 3. Relationships between Bond Price and Bond Characteristics
CFA Practice Question
The price movements of option-free bonds are ______.
B. primarily characterized by the inverse relationship between required yield and price and positive convexity
C. primarily characterized by the direct relationship between required yield and price and negative convexity
A. primarily characterized by the inverse relationship between required yield and price and negative convexity
B. primarily characterized by the inverse relationship between required yield and price and positive convexity
C. primarily characterized by the direct relationship between required yield and price and negative convexity
Correct Answer: B
User Contributed Comments 2
| User | Comment |
|---|---|
| johntan1979 | Negative convexity only applies to mortgage bonds and callable bonds at low yields (likely to be called). |
| Olesya_CFA | Thanks johntan1979 |