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The manager of a bond fund who purchases bonds with high, positive convexity for the portfolio is likely to expect which of the following to

The manager of a bond fund who purchases bonds with high, positive convexity for the portfolio is likely to expect which of the following to occur in the future

  1. Interest rates will remain exactly the same.
  2. Interest rates will rise rapidly.
  3. Interest rates will change very little.
  4. Daily changes in yield on corporate bonds will experience high volatility.

Group of answer choices

II and IV

I and III

I only

III only

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