If you expected interest rates to fall,you would prefer to own bonds with
A) long durations and high convexity.
B) long durations and low convexity.
C) short durations and high convexity.
D) short durations and low convexity.
E) none of the above.

Question

Quizplus · Accepted Answer

Bonds with long durations and high convexity are more sensitive to interest rate changes, meaning they will increase in value more when interest rates fall.

If You Expected Interest Rates to Fall,you Would Prefer to Own