In general, a bond investor
A) wants high convexity.
B) wants high duration.
C) wants high duration but low convexity.
D) wants a low coupon and low convexity.

Question

Quizplus · Accepted Answer

High convexity in a bond generally benefits the investor because it means the bond's price will increase more when interest rates fall and decrease less when interest rates rise, compared to a bond with lower convexity. This characteristic provides a form of protection against interest rate movements.

In General, a Bond Investor