When estimating a price change for a bond due to a change in the yield,incorporating convexity does not improve the estimate.

Name: When estimating a price change for a bond due to a change in the yield,incorporating convexity does not improve the estimate.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The characteristic of convexity arises from the non-linear relationship between yield and prices.Knowledge of convexity increases the accuracy of price change prediction given changes in the yield.

When Estimating a Price Change for a Bond Due to a Change