单选题 For a given change in yields, the difference between the actual change in a bond's price and that predicted using the duration measure will be greater for:

A. a bond with greater convexity.
B. a short-term bond.
C. inverse convexity.

【正确答案】 A

【答案解析】Duration is a linear measure of the relationship between a bond's price and yield. The true relationship is not linear as measured by the convexity. When convexity is higher, duration will be less accurate in predicting a bond's price for a given change in interest rates. Short-term bonds generally have low convexity.