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Consider the following portfolios. Which would you prefer if you expect interest rates to decline by 225bps? Pick the best answer. Portfolio Effective duration (yrs)

Consider the following portfolios. Which would you prefer if you expect interest rates to decline by 225bps? Pick the best answer.

Portfolio	Effective duration (yrs)	Approximate convexity
A	5	200
B	7	150
C	10	-300

Portfolio A

Portfolio B

Portfolio C

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