Asked by
Kasandra Medina
on Oct 19, 2024
Verified
In regard to bonds, convexity relates to the ________.
A) shape of the bond price curve with respect to interest rates
B) shape of the yield curve with respect to maturity
C) slope of the yield curve with respect to liquidity premiums
D) size of the bid-ask spread
Convexity
A measure of the curvature or the degree of the curve in the relationship between bond prices and bond yields, indicating how the duration of a bond changes as the interest rate changes.
Bond Price Curve
A graphical representation of the relationship between the price of bonds and their respective maturities.
Interest Rates
The cost of borrowing money, typically expressed as a percentage of the amount lent, deposited, or borrowed.
- Gain an understanding of the fundamentals of bond pricing, yields, and returns.
Verified Answer
KG
Learning Objectives
- Gain an understanding of the fundamentals of bond pricing, yields, and returns.