Convexity is a desirable effect to a portfolio manager because it is easy to measure and price.

Name: Convexity is a desirable effect to a portfolio manager because it is easy to measure and price.
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Question

Quizplus · Accepted Answer

Convexity is desirable because it implies that bond prices rise more when interest rates fall than they fall when interest rates rise, providing a cushion against rising rates. However, measuring and pricing convexity can be complex due to its nonlinear characteristics.

Convexity Is a Desirable Effect to a Portfolio Manager Because