CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

Modified convexity is different from effective convexity because ______

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
Correct Answer: C

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