Multiple Choice
Using its modified duration, the price of a coupon bond is forecasted to change from $990 to $925 due to an increase in interest rates. If the bond's convexity is considered, the new forecasted price of the bond will be:
A) higher than $925.
B) lower than $925.
C) equal to $925.
D) Cannot be determined.
Correct Answer:
Verified
Correct Answer:
Verified
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