An increase in a bond's yield to maturity results in a price decline that is ________ the price increase resulting from a decrease in yield of equal magnitude.

Question

Quizplus · Accepted Answer

Bond prices and yields have an inverse relationship, but the price increase from a decrease in yield is larger than the price decline from an equivalent increase in yield due to convexity.

An Increase in a Bond's Yield to Maturity Results in a Price