If two coupon bonds are equivalent in all other respects, which will have the higher convexity?
A) The bond with the higher coupon.
B) The bond with the longer maturity.
C) The bond with the greater yield.
D) The bond with the lower credit rating.

Question

Quizplus · Accepted Answer

Convexity is higher for bonds with longer maturities because they are more sensitive to interest rate changes, leading to a more pronounced curvature in the price-yield relationship.

If Two Coupon Bonds Are Equivalent in All Other Respects