- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 12. Yield-Based Bond Convexity and Portfolio Properties
- Subject 1. Bond Convexity and Convexity Adjustment
CFA Practice Question
Callable bond prices at yields greater than the coupon rate exhibit ______.
B. positive convexity
C. negative concavity
A. negative convexity
B. positive convexity
C. negative concavity
Correct Answer: B
User Contributed Comments 5
| User | Comment |
|---|---|
| kalps | It is only when yields fall does the price not change as expected becos of call option - i.e. price increase is surpressed by option |
| nchilds | Yields are rising in this example |
| Rotigga | Just remember the graph and questions like these will be easy. |
| cong | Effective convexity can be negative. Modified convexity can't. |
| johntan1979 | That's deep, cong :) |