The Convexity Bias Between FRAs and Eurodollar Futures Implies That

Multiple Choice

The convexity bias between FRAs and eurodollar futures implies that

A) The futures results in greater cash outflows or smaller cash inflows than the FRA.
B) The futures settlement amount is convex in Libor rates.
C) The futures results in greater cash inflows or lower cash outflows than the FRA.
D) The FRA payoff minus the futures payoff is convex in Libor rates.