CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

Callable bond prices at yields greater than the coupon rate exhibit:
A. negative convexity.
B. positive convexity.
C. negative concavity.

User Contributed Comments 6

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 :)
albert9 doesn't positive convexity = negative concavity?
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