Question
If bond A and B have the same duration, but bond B has less convexity than A, then which of the following statement(s) is correct?
If bond A and B have the same duration, but bond B has less convexity than A, then which of the following statement(s) is correct?
(a) the price of bond A will fall more than B if the level of interest rates increases.
(b) the price of bond A will fall less than B if the level of interest rates increases.
(c) the price of bond A will rise more than B if the level of interest rates decreases.
(d) the price of bond A will rise less than B if the level of interest rates decreases.
(e) the price of bond A will change in the same amount as B for a given change in the level of interest rates because they have the same duration
Please help select which ones are would be right (with a brief explanation if possible)
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