All fixed-income assets exhibit convexity in their price-yield relationships.

Question

Quizplus · Accepted Answer

Convexity is a measure of the curvature in the relationship between price and yield. All fixed-income assets, including bonds, exhibit some degree of convexity. This means that for a given change in yield, the change in price may not be linear or proportional, but rather, it may be more or less than expected depending on the level of convexity of the asset.

All Fixed-Income Assets Exhibit Convexity in Their Price-Yield Relationships