A graph of the relationship between a bond's price and it's yield is

Question

Quizplus · Accepted Answer

The relationship between a bond's price and yield is convex, meaning the curve is bowed outward, with increasing at a decreasing rate. This is because as the yield decreases, the bond's price increases at a decreasing rate, and as the yield increases, the bond's price decreases at an increasing rate. This relationship can be described by the bond's duration and convexity, which are used to predict price changes for a given change in yield.

A Graph of the Relationship Between a Bond's Price and It's