1 describe the relationship between bond prices and the


1. Describe the relationship between bond prices and the market interest rate?

2. Explain how the coupon rate, maturity, default risk, and yield-to-maturity at which the bond is selling affect the price sensitivity to a change in the yield-to-maturity?

3. Describe what mortgage-backed securities (MBS) are and why the convexity of MBS is negative?

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Finance Basics: 1 describe the relationship between bond prices and the
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