Rioja topic test

CFA Level III Fixed Income
#1

#4 I do not understand the explanation here-why his explanation of convexity adjustment is incorrect

A convexity adjustment is used to improve the accuracy of the index’s estimated price change for large parallel changes in interest rates. Wrong??!!! why wrong?

A convexity adjustment is an estimate of the change in price that is not explained by duration- that is correct

#2

It states “Non-parallel changes”…convexity adjustment is for parallel changes, and even at large changes I bet it would be dubious at best.

#3

+1

#4

ok Thanks. I have to read q more carefully.