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Question 1 3 Convexity arises because Bonds pay interest semiannually Coupon changes are the opposite sign of interest rate changes Duration is an increasing function

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Convexity arises because

Bonds pay interest semiannually

Coupon changes are the opposite sign of interest rate changes

Duration is an increasing function of maturity

Present values are a nonlinear function of interest rates

Duration increases at higher interest rates

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