The concept of ________ suggests that when interest rates change by a large number of basis points, a Treasury security's price change will not be the same for an increase and decrease in interest rates.

Question

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Convexity refers to the phenomenon where the price change of a bond is not linearly related to the change in interest rates. As interest rates change by different amounts, the bond's price change will vary due to differences in convexity. This is important for investors to understand when assessing the risks and potential returns of fixed-income investments.

The Concept of ________ Suggests That When Interest Rates Change