medium · Certified Financial Planner Risk Management
A financial planner is evaluating bond positions for the Bergstrom portfolio. If interest rates are projected to fall significantly, the planner observes that the actual price increase of their long-term bonds is higher than the estimate provided by the bonds' duration.
This phenomenon is best explained by which concept?
- Bond Convexity
- Macaulay Duration
- Immunization
- The Reinvestment Rate Effect
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