CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

Callable bonds exhibit ______ convexity.

A. positive
B. negative
C. both A and B
Correct Answer: C

User Contributed Comments 2

User Comment
janglejuic positive then negative as you see from the graph in LOS
GBolt93 pretty sure you have that backwards. Low yields have negative convexity because you would call the bond and refinance at a lower rate. high yields have positive convexity like a non-callable bond because the call option is worthless since you wouldn't want to refinance the debt at a higher rate.
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