Makes a market in corporate bonds

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1. Your friend is a fixed income trader who makes a market in corporate bonds. One day after work, you notice a sheet that falls out of her valise that looks like this:

Bond

Current price

Price after 1% rate hike

Price after 1% rate drop

ABC Co. 5.25% 1.1.2029

$921.50

$857.00

$986.01

DEF Co. 4.25% 7.1.2021

$877.50

$824.85

$930.15

GHI Co. 3.25% 1.1.2018

$1,021.50

$980.64

$1062.36

After looking at this for a moment, you realize that the property not indicated on the sheet that is contributing to the bonds' price change is known as:

a. Convexity

b. Accrued interest

c. Duration

Reference no: EM131537396

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