18. The price-yield relationship for a typical bond is convex, opening upward as shown in Figure 15.2.

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18. The price-yield relationship for a typical bond is convex, opening upward as shown in Figure 15.2. Investment professionals often describe the price-yield relationship of mortgage pass-through securities as being "negatively convex"; that is, a graph of the relationship opens downward. What features of these securities could produce such a relationship?

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Investments

ISBN: 9788120321014

6th Edition

Authors: William F. Sharpe, Gordon J. Alexander, Jeffery V. Bailey

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