In general,all other factors held constant,the longer the time to maturity of bonds,the smaller the rate of the change of value will be.This property of coupon bonds is often referred to as:
A) duration.
B) coupon effect.
C) convexity.
D) yield effect.

Question

Quizplus · Accepted Answer

Convexity refers to the property of bond prices showing a non-linear relationship with changes in interest rates, which implies that the longer the time to maturity, the less sensitive the bond's price is to changes in yields. This characteristic helps to explain why longer-maturity bonds might not change in value as rapidly as shorter-maturity bonds with shifts in interest rates.

In General,all Other Factors Held Constant,the Longer the Time to Maturity